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Appendix F Australian classification of local governments ..................................................... 217

vii

List of tables Table 1-1 Local government employment, by jurisdiction, 1998 and 2012 ............................4

Table 1-2 Share of taxation revenue, by sphere of government and source of revenue, 2011-12 ......................................................................................................................7

Table 1-3 Local government revenue sources, by jurisdiction, 2011-12 ................................8

Table 1-4 Local government revenue source, by jurisdiction, $ per capita, 2011-12 ............9

Table 1-5 Local government expenditure, by purpose and jurisdiction, 2011-12 .............. 11

Table 1-6 Local government assets and liabilities, 2011-12 ................................................ 12

Table 2-3 2011-12 allocations of general purpose and local road grants among jurisdictions ............................................................................................................... 24

Table 2-6 Distribution of local governing bodies, by type and jurisdiction, at 1 July 2012 .. 29

Table 2-7 Average general purpose grant per capita to local governing bodies by jurisdiction and by classification, 2011-12 ............................................................................... 32

Table 2-8 Average local road grant per kilometre to local governing bodies by jurisdiction and by classification, 2011-12 ............................................................................... 33

Table 2-9 Local governing bodies on the minimum grant, by jurisdiction, 2002-03 to 2011-12 .............................................................................................................. 34

Table 2-10 Statu s of most recent major methodology reviews, by state, as at 30 June 2012 .................................................................................................. 38

Table 3-1 Local Government Reform Fund, phase two ........................................................... 46

Table 3-2 Number of local governments, by state, 1910 to 2012 ..........................................51

Table 4-1 Distribution of Indigenous local governing bodies, by eligibility type and jurisdiction, at July 2012 .......................................................................................... 59

Table B.1 Major cost drivers and average expenditures ........................................................ 81

Table B.2 Average grant revenue on a per unit basis ............................................................. 82

Table B.3 Derivation of the average rates for each of the property classes ......................... 83

Table F.3 Changes in ACLG category for 2011-12: reasons for change, by state, July 2011................................................................................................................. 221

01

Local government in Australia

3

Local government in Australia

01

During 2011-12, Australia had 565 local governing bodies eligible to receive funding under the Australian Government’s Financial Assistance Grant programme. The Local Government (Financial Assistance) Act 1995 (Cwlth) (the Act) provides the legislative basis for this programme. These 565 local governing bodies include 555 local governments and 10 declared local governing bodies: five Indigenous local governing bodies and the Outback Areas Community Development Trust in South Australia; the Trust Account in the Northern Territory; and the Silverton and Tibooburra villages and Lord Howe Island in New South Wales.

The Australian Capital Territory receives funding through the Financial Assistance Grant programme. However, it is considered a special case and not a local governing body because it maintains both territorial and local government functions.

The Act defines the term ‘local governing bodies’ in a way that includes local governments established under state and Northern Territory legislation as well as ‘declared bodies’. The term ‘council’ is regularly employed in this report to encompass all local governing bodies, recognising its common use to denote ‘local government’.

Declared bodies are provided with financial assistance grants and are treated as local governments for the purposes of grant allocations. However, declared bodies are not local governments and have different legislative obligations. Due to this difference, data provided in this report relating to local government may not be directly comparable to that for local governing bodies. Also, data relating to local government cannot be directly compared to that for the Australian Capital Territory, as the Australian Capital Territory performs both territorial and local government functions.

Local government was created in the early 1840s to enable colonial governments to deliver local services and allow local residents to contribute to their cost. The initial focus was on property-based services, particularly building and maintaining local roads, which provided the primary means of transportation. In 1840 the Adelaide Corporation was created, followed in July 1842 by incorporation of the City of Sydney and in August 1842 by the incorporation of Town of Melbourne.

At the time of federation in 1901, the states gave up to the Commonwealth power over certain matters they agreed would be better administered at the national level. These powers included defence, immigration, foreign affairs, customs and excise duties, trade and commerce, and taxation. Since federation, more powers have been transferred to the Australian Government or shared between the states and the Australian Government.

The taxing power passed to the Australian Government has generated regular consultation between the Australian and state governments on the distribution of revenue and other matters. Councils and conferences of ministers frequently convene to cover areas like agriculture, education, housing, employment, minerals and energy, transport and legal matters.

4

Local Government National Report 2011-12

While the structure, powers and responsibilities of the Australian and state governments were established during federation, local government was not one of the areas identified as a Commonwealth responsibility; it is a state and Northern Territory responsibility. The states and the Northern Territory pass the legal and regulatory framework for the creation and operation of local government.

As a consequence, there are often significant differences between the state systems for overseeing councils. The Australian Government has recognised that the national interest is served through improving the capacity of local government to deliver services to all Australians by enhancing the performance and efficiency of the sector. The Act is an important means used to achieve these goals.

Local government functions Local government systems differ from state to state, but the main roles of local government are governance, planning, community development, service delivery, asset management and regulation.

Local governments are close to their communities and have a unique insight into local and community needs. Councils determine service provision according to local needs and the requirements of state and territory local government legislation.

Local government employees In June 2012 there were 1 892 100 public sector employees, including 250 000 employees in Australian Government, 1 449 600 in state government and 192 500 in local government.

Table 1-1 Local government employment, by jurisdiction, 1998 and 2012

Jurisdiction

Employees Aug 1998 ‘000a

Population Sept 1998 ‘000b

Population served per employee Sept 1998

Employees June 2012 ‘000a

Population June 2012 ‘000b

Population served per employee June 2012

NSW 44.6 6 358.1 142.6 59.9 7 290.3 121.7

Vic. 31.1 4 648.9 149.5 50.6 5 623.5 111.1

Qld 36.5 3 460.4 94.8 40.6 4 560.1 112.3

WA 13.3 1 830.8 137.7 23.4 2 430.3 103.9

SA 8.1 1 491.0 184.1 11 1 654.8 150.4

Tas. 3.6 471.9 131.1 #3.7 512 138.4

NT 2.6 190.6 73.3 3.2 234.8 73.4

National 139.9 18 764.6# 132.3* 192.5 22 683.6# 117.8*

Notes: Data ma y not add to totals due rounding.

* These figures are the national ratio of population per local go vernment employee, not totals or averages of state figures.

# Estimat es have a relative standard error of 25% to 50% and should be used with caution.

Population The estimated resident population of Australia at 30 June 2012 was 22 683 573 persons. There was an increase of 359 640 persons from 30 June 2011 to that date.

Australia’s population grew by 1.6 per cent during the year ended 30 June 2012. All states and territories experienced positive population growth for the year ended 30 June 2012. Western Australia continued to record the fastest growth rate (3.3 per cent), while Tasmania recorded the slowest (0.2 per cent).

Australia’s population density as at June 2012 was 3.0 people per square kilometre. Among the states and territories, the Australian Capital Territory had the highest population density at 160 people per square kilometre, followed by Victoria with 25.0, New South Wales with 9.1 and Tasmania with 7.5. The remaining states and territories all had population densities below the Australian figure, with the Northern Territory having the lowest at just 0.2 people per square kilometre (Australian Bureau of Statistics, Regional Population Growth, Australia 2012, ABS cat. no. 3218.0).

Diversity Considerable diversity can exist both within and between jurisdictions. This diversity extends beyond rural-metropolitan differences. In addition to size and population, other significant differences between local governing bodies include:

â¢ legislative frameworks within which councils operate, including voting rights and electoral systems

â¢ physical, economic, social and cultural environments of local government areas

â¢ range and scale of functions.

Indigenous councils, for example, have been established under different legislative frameworks. They can be established under the mainstream local government legislation of a jurisdiction or through distinct legislation or they can be ‘declared’ to be local governing bodies by the Australian Government Minister for Local Government on advice from a state minister.

National representation of local government A number of national groups represent the interests of local government and professionals working in the local government sector, including the Local Government Managers Australia (LGMA), the Australian Local Government Association (ALGA) and the Australian Council of Local Government (ACLG).

Local Government Managers Australia LGMA is a professional association of local government managers throughout Australia and the Asia-Pacific. LGMA is committed to developing and improving local government management,

6

Local Government National Report 2011-12

maintaining high professional and ethical standards and ensuring its members are at the forefront of change and innovation.

Australian Local Government Association ALGA is a federation of state and Northern Territory local government associations and the Australian Capital Territory Government. ALGA aims to add value, at the national level, to the work of state and territory associations and their member councils. It represents the interests of local government through its participation in the Council of Australian Governments (COAG) and ministerial councils where there is a clear local government interest.

Australian Council of Local Government ACLG was established to engage local government directly with the Australian Government. It provided a forum for the Australian Government and local government to consider policies and initiatives in areas of mutual interest and promotes collaboration between the Australian Government and local government as well as between local governments themselves.

Involvement in inter-governmental structures

Council of Australian Governments COAG is the peak inter-governmental forum in Australia. It comprises the Prime Minister, state premiers, territory chief ministers and the ALGA President and was established in May 1992. COAG’s role is to initiate, develop and monitor implementation of policy reforms of national significance and require co-operative action by all Australian governments.

COAG establishes inter-governmental agreements that signify the commitment of jurisdictions to implementing its decisions. In many instances, these agreements are precursors to the passage of legislation at the Commonwealth, state and territory levels.

On 29 November 2008, against the background of the unfolding global financial crisis, COAG agreed to the Intergovernmental Agreement on Federal Financial Relations (the Agreement).

The Agreement commenced on 1 January 2009 and involved rationalising the number of payments made to state and local governments while increasing the overall payments. It provided clearer specification of the roles and responsibilities of each sphere of government so that the appropriate sphere became accountable to the community. The Agreement also provided incentives for reform through National Partnership Agreement reform payments and more transparent reporting of outcomes to drive better service delivery.

The Agreement provided a foundation for the economic and social reforms needed to boost productivity and workforce participation. It also facilitated delivery of economic stimulus through a short-term expansion in state and local government service delivery programmes, particularly in the schools, infrastructure and housing sectors. This was accompanied by a major rationalisation of the number of payments to the states for specific purpose payments (SPPs), reducing the number of such payments from over 90 to five.

Central to these reforms was a financial package that provides $7.1 billion in SPP funding to the states over five years to improve services for all Australians. Commonwealth-state financial

7

01 â¢ Local government in Australia

relations were placed on a secure footing with the creation of five new national SPPs, including total funding of:

â¢ $60.5 billion for a National Healthcare SPP

â¢ $18 billion for a National Schools SPP

â¢ $6.7 billion for a National Skills and Workforce Development SPP

â¢ $5.3 billion for a National Disability Services SPP

â¢ $6.2 billion for a National Affordable Housing SPP.

Each SPP is associated with a national agreement that contains the objectives, outcomes, outputs and performance indicators, and clarifies the roles and responsibilities that will guide the Commonwealth and states in the delivery of services across the relevant sectors. COAG agreed to six new national agreements: the National Healthcare Agreement, the National Education Agreement, the National Agreement for Skills and Workforce Development, the National Disability Agreement, the National Affordable Housing Agreement and the National Indigenous Reform Agreement.

Further information is available at www.coag.gov.au.

Local government finances

Share of taxation revenue by sphere of government Local government’s taxation revenue increased by 6.0 per cent from 2010-11 to $13.2 billion in 2011-12. Local government’s taxation revenue in 2011-12 amounted to 3.4 per cent of all taxes raised across all spheres of government in Australia (Table 1.2). Taxes on property were the sole source of taxation revenue for local governments: refer to Australian Bureau of Statistics, Taxation Revenue, Australia, 2011-12, ABS cat. no. 5506.0, for further information.

Table 1-2 Share of taxation revenue, by sphere of government and source of revenue, 2011-12

Revenue source Federal State Local Total

% % % %

Taxes on income 59.2 - - 59.2

Employers payroll taxes 0.1 5.1 - 5.1

Taxes on property - 5.2 3.4 8.6

Taxes on provision of goods and services 21.4 2.8 - 24.2

Taxes on use of goods and performance activities 0.8 2.2 - 3.0

Total 81.5 15.3 3.4 100.0

Notes: Figures ma y not add to totals due to inclusion of external territories and rounding.

Local government revenue sources Overall, councils raise about 88 per cent of their own revenue, with grants and subsidies only making up about 12 per cent (Table 1.3). Individual councils have differing abilities to raise revenue; this may not be apparent when considering national or even state average. The differences between urban, rural and remote councils, their population size, rating base and ability to levy user charges all affect their ability to raise revenue.

Local government revenue - taxes Local government raises taxes through rates on property. In 2011-12, 35.8 per cent of local government revenue nationally came from rates. The proportion of revenue from rates varied notably between jurisdictions - from a high of 56.3 per cent for South Australia to a low of 18.1 per cent for the Northern Territory (Table 1.3).

The variation of revenue per capita across states for all revenue sources is shown in Table 1.4. While South Australian councils levy the highest rates per capita, they raise the lowest revenue per capita for all other revenue sources. As a result, South Australian councils collect the lowest total revenue per capita overall.

9

01 â¢ Local government in Australia

Table 1-4 Local government revenue source, by jurisdiction, $ per capita, 2011-12

Rates in each state and the Northern Territory are based on a valuation of the land upon which they are charged. However, methods for assessing land value differ significantly between states. New South Wales has statewide requirements that rates are based on the unimproved value of the land. In Victoria and South Australia, different valuation assessments are used depending on the type or primary use of the land.

Local government revenue - other non-grant revenue sources Local government received on average 24.5 per cent of its revenue in 2011-12 from the sale of goods and services (Table 1.3).

Councils in the Northern Territory are more reliant than councils in other jurisdictions on government grants and subsidies, as they raised only 70.8 per cent of their own revenue. For the remaining states, the proportion of revenue raised from own sources ranged from 86.1 per cent for Tasmanian councils to 92.0 per cent for Queensland councils (Table 1.3).

Local government revenue - Australian Government grants The Australian Government supports local government through financial assistance grants, SPPs and direct programme funding.

In 2011-12, the Australian Government provided $2.2 billion in local government financial assistance grants to local governing bodies and the Australian Capital Territory. The means of distributing financial assistance grants is discussed in Chapter 2. The allocation of financial assistance grants is at Appendix D.

Under the Intergovernmental Agreement on Federal Financial Relations, the Australian Government continues to provide ongoing financial support to local government through:

â¢ national SPPs to be spent in key service delivery sectors

â¢ National Partnership payments to support delivery of specified outputs or projects, facilitate reforms or reward those jurisdictions that deliver on nationally significant reforms

10

Local Government National Report 2011-12

â¢ general revenue assistance, consisting of GST payments and other general revenue assistance.

The national SPPs are distributed among the states each year in accordance with the Australian Statistician’s determination of state population shares as at 31 December of that year. An equal per capita distribution of the National SPPs ensures that all Australians, regardless of the jurisdiction they live in, are provided with the same share of Commonwealth funding support for state service delivery.

Local government expenditure Local government expenditure is dominated by transport and communication (23.9 per cent) followed by housing and community amenities (22.5 per cent) and general public services (17.9 per cent) (Table 1.5).

11

01 â¢ Local government in Australia

Table 1-5 Local government expenditure, by purpose and jurisdiction, 2011-12

Assets and liabilities In 2011-12, local government in Australia had a net worth of $331.57 billion, with assets worth $349.79 billion and liabilities worth $18.22 billion (Table 1.6).

12

Local Government National Report 2011-12

At 30 June 2012, local government’s assets exceeded its liabilities, continuing the trend since 30 June 2000 of a net surplus position for local governments nationally. As at 30 June 2012 on a state basis, only councils in South Australia had a net debt position, while all the other states had a net surplus (Table 1.6).

* Ne t debt figures are memorandum items for comparison only. They do not derive from the above calculations. Net debt is the sum of selected financial liabilities, deposits held, advances received, government securities, loans, and other borrowing; less the sum of selected financial assets, cash and deposits, advances paid, and investments, loans and placements. Net debt is a common measure of the strength of a government’s financial position.

# Ne t financial worth is the difference between total financial assets and total liabilities.

In 2011-12, the Australian Government provided a total of $2.2 billion in financial assistance grants to 565 local governing bodies and the Australian Capital Territory Government - an average of around $96 per capita.

Australian Government financial assistance grants to local government comprise a general purpose component and a local road component. In 2011-12 the general purpose entitlement was $1.5 billion, while the local road entitlement was $663.5 million.

Both components are paid to the states and territories to be passed on to local government. Financial assistance grants are untied in the hands of local governments, which are free to spend them according to local priorities.

The objectives of the general purpose component include improving local governments’ capacity to provide their communities with an equitable level of services and increasing the efficiency and effectiveness of local government.

General purpose grants commenced in 1974-75, with allocations distributed according to Commonwealth Grants Commission recommendations. This was followed, over the next two decades, by developments in legislative arrangements for providing financial assistance to local government. General purpose grants are currently provided under the Local Government (Financial Assistance) Act 1995 (Cwlth) (the Act), which replaced the Local Government (Financial Assistance) Act 1986 (Cwlth) from 1 July 1995.

The 1990 Special Premiers’ Conference determined that a local road component would be provided in addition to general purpose component from July 1991. Local road grants are intended to help local government with the cost of maintaining their local roads.

The Australian Government introduced supplementary funding to South Australian councils for local roads in 2004-05 for three years. This funding has been provided in each year since 2004-05.

Overview of current arrangements In determining the distribution of financial assistance grants to local government, the current arrangements are:

â¢ Before the start of each financial year, the Australian Government estimates the quantum of general purpose and local road grants that local government is entitled to nationally. This is equal to the national grant entitlement for the previous financial year multiplied by the estimated escalation factor of changes in population and the Consumer Price Index (CPI).

â¢ The states and territories are advised of their estimated quantum of general purpose and local road grants, calculated in accordance with the Act.

16

Local Government National Report 2011-12

â¢ Local government grants commissions in each state and the Northern Territory recommend to their local government minister the distribution of general purpose and local road grants among local governing bodies in their jurisdiction. The Australian Capital Territory does not have a local government grants commission, because its government provides local government services in lieu of the territory having a system of local government.

â¢ The state and Northern Territory local government ministers forward the recommendations of the local government grants commission in their jurisdiction to the Australian Government Minister (the Minister) responsible for local government.

â¢ When satisfied that all legislative requirements have been met, the Minister approves payment of the recommended grants.

â¢ The Australian Government pays the grants in quarterly instalments to the states and territories, which, without undue delay, pass them on to local government as untied grants.

â¢ When updated changes in the CPI and population become available toward the end of the financial year, an actual escalation factor is calculated and the actual grant entitlement is determined.

â¢ Any difference between the estimated and actual grant entitlements is combined with the estimated entitlement in the next year to determine that next year’s cash payment. This is referred to as the adjustment.

More details on each step are given below.

Determining the quantum of the grant Section 8 of the Act specifies the formula the federal Treasurer (the Treasurer) is to apply each year for calculating the escalation factors used to determine the local government financial assistance grant. The escalation factors are based on changes in CPI and population.

The Act provides the Treasurer with discretion to increase or decrease the escalation factors in special circumstances. In applying this discretion, the Treasurer is required to have regard to the objects of the Act (see ‘Objects of the Act’, below) and any other matter the Treasurer thinks relevant. The same escalation factor is applied to both the general purpose and local road components.

17

02 â¢ Financial assistance grants to local government

OBJECTS OF THE ACT

Section 3(2) of the Local Government (Financial Assistance) Act 1995 (Cwlth) states the objects of the Act as follows.

The Parliament wishes to provide financial assistance to the states for the purposes of improving:

â¢ the financial capacity o

f local governing bodies

â¢ the capacity o

f local governing bodies to provide their residents with an equitable level of services

â¢ the ce

rtainty of funding for local governing bodies

â¢ the e

fficiency and effectiveness of local governing bodies

â¢ the pr

ovision by local governing bodies of services to Aboriginal and Torres Strait Islander communities.

Determining entitlements for 2011-12 and 2012-13 Calculation of the 2011-12 actual grant entitlement and the 2012-13 estimated grant entitlement using the final escalation factor (the final factor) and estimated escalation factor (the estimated factor) respectively are set out in Tables 2.1 and 2.2.

In 2011-12, the estimated grant entitlement was $1.6 billion. This comprised $1.1 billion in general purpose grants and $496.5 million in local road grants (Table 2.1).

In June 2012, two quarters of the budgeted allocation for the 2012-13 grant were brought forward and paid to local government so that they had immediate use of the funds, had additional flexibility and could respond to the widespread natural disasters and other pressures. The brought-forward payment totalled $1.1 billion, consisting of $774.2 million in general purpose grant and $343.5 million in local road grant (Table 2.1).

The brought-forward payment was provided for under amendments made in 2009 to the Local Government (Financial Assistance) Act 1995.

The 2011-12 final factor was calculated using the CPI for the year ending March 2012 and revised population growth figures to December 2010. To account for, and balance the effect of, the brought-forward payment in June 2011, the Treasurer used his discretionary power provided under the Act to consider the brought-forward payment in determining the 2011-12 final factor. The calculations for the 2011-12 final factor are explained in ‘Determining the final factor for 2011-12’, on page 21.

The 2011-12 final factor of 1.2832 resulted in the 2011-12 actual entitlement being $2.7 billion, comprising $1.9 billion in general purpose grants and $823.8 million in local road grants (Table 2.1). As the 2011-12 actual entitlement was less than the combination of the 2011-12 estimated entitlement and the brought-forward payment in June 2011, there was a negative adjustment of $52.9 million to the grant in the following year.

The 2011-12 actual entitlement was calculated using improved counting methodologies employed in the 2011 Census by the Australian Bureau of Statistics. This resulted in a downward revision of Australia’s population. In accordance with the Act, the 2012-13 payment was adjusted down by $52.9 million.

18

Local Government National Report 2011-12

The 2012-13 estimated factor was calculated using the projected CPI for the year ending March 2013 and revised population growth figures to December 2011. To account for, and balance the effect of, the brought-forward payment in June 2012, the Treasurer used his discretionary power provided under the Act to decrease the 2012-13 estimated factor. The calculations for the 2012-13 estimated factor are explained in ‘Determining the estimated factor for 2012-13’, on page 22.

The 2012-13 estimated factor of 0.4007 resulted in the estimated entitlement for 2012-13 being $1.1 billion, comprising $743.9 million in general purpose grants and $330.1 million in local road grants (Table 2.2). The Australian Government paid $2.1 billion in financial assistance grants to local government in 2012-13. This is the combination of the 2012-13 estimated entitlement of $1.1 billion, the 2011-12 negative adjustment of $52.9 million, and the brought-forward payment of $1.1 billion (Table 2.2).

In addition to the general purpose and local road grant, South Australian councils received additional funding of $16.3 million for local roads in 2011-12.

orward amounts are included in the year in which they are entitled. Source:

Depar

tment of Infrastructure and Regional Development.

21

02 â¢ Financial assistance grants to local government

DETERMINING THE FINAL FACTOR FOR 2011-12

Under s. 8 of the Local Government (Financial Assistance) Act 1995 (Cwlth), the unadjusted factor for 2011-12 was calculated as follows:

Unadjusted factor = Population of Australia at 31 Dec 2010 x CPI at March 2012 Population of Australia at 31 Dec 2009 CPI at March 2011

That is:

Unadjusted factor = 22 179 728 x 179.5

= 1.0172

22 149 445 176.7

However, to account for the Australian Government’s decision to bring forward the first two quarters of the budgeted allocation in 2012-13 ($1.1 billion) for payment in the 2011-12 financial year, the unadjusted factor was decreased in accordance with s. 8(1)(c) of the Local Government (Financial Assistance) Act 1995 (Cwlth) by the adjustment factor as follows:

Under s. 8 of the Local Government (Financial Assistance) Act 1995 (Cwlth), the unadjusted factor for 2012-13 was calculated as follows:

Unadjusted factor = Population of Australia at 31 Dec 2011 x CPI at March 2013 Population of Australia at 31 Dec 2010 CPI at March 2012

That is:

Unadjusted factor = 22 482 217 x 184.9

= 1.0441

22 179 728 179.5

However, to account for the Australian Government’s decision to bring forward the first two quarters of the budgeted allocation in 2012-13 ($1.1 billion) for payment in the 2011-12 financial year, the final factor was decreased, in accordance with s. 8(1)(c) of the Local Government (Financial Assistance) Act 1995 (Cwlth), by the adjustment factor as follows:

At the beginning of each financial year, the quantum of the grant to local government is estimated using the estimated factor, which is based on forecasts of the Consumer Price Index (CPI) and population increases for the year.

At the end of each financial year the actual, or final, grant for local government is calculated using the final factor, which is based on updated CPI and population figures.

Invariably there is a difference between the estimated and actual grant entitlements. This difference is combined with the estimated entitlement in the following financial year to provide the actual cash payment for the next year.

Consequently, there are three ways in which the financial assistance grant can be reported: an estimated grant entitlement, an actual grant entitlement and the actual cash paid.

23

02 â¢ Financial assistance grants to local government

Inter-jurisdictional distribution of grant The Act specifies that the general purpose grant is to be divided among the jurisdictions on a per capita basis. The distribution is based on the Australian Bureau of Statistics’ estimate of each jurisdiction’s population and the estimated population of all states and territories as at 31 December of the previous year.

By contrast, each jurisdiction’s share of the local road grant is fixed. The distribution is based on shares determined from the former tied grant arrangements (see ‘History of the Interstate Distribution of Local Road Grants’ in the 2001-02 Local Government National Report). Therefore the local road grant share for each state and territory is determined by multiplying the previous year’s funding by the estimated factor as determined by the Treasurer.

Table 2.3 shows the allocation of the actual entitlement for 2011-12 among jurisdictions. Table 2.4 shows the allocation of the estimated entitlement for 2012-13 among jurisdictions and the percentage change in the grant from 2011-12 to 2012-13.

24

Local Government National Report 2011-12

Table 2-3

2011-12 allocations of general purpose and local road grants among jurisdictions

Australian Demographic Statistics, December 2010, ABS cat.no. 3101.0. Figures do not include the brought forward (early) payment made in

June

2011.

GP

general pur

pose

LR

local r

oad

Km

kilome

tres. Source:

Depar

tment of Infrastructure and Regional Development.

26

Local Government National Report 2011-12

Quantum of financial assistance grants allocations Table 2.5 shows the aggregate level of financial assistance grants since the Australian Government started to provide general purpose grants in 1974-75 and local road grants in 1991-92.

Year General purpose grants ($) Local road grants ($) Total grants ($)

1974-75 56 345 000 n/a 56 345 000

1975-76 79 978 000 n/a 79 978 000

1976-77 140 070 131 n/a 140 070 131

1977-78 165 327 608 n/a 165 327 608

1978-79 179 426 870 n/a 179 426 870

1979-80a 222 801 191 n/a 222 801 191

1980-81 302 226 347 n/a 302 226 347

1981-82 352 544 573 n/a 352 544 573

1982-83 426 518 330 n/a 426 518 330

1983-84 461 531 180 n/a 461 531 180

1984-85 488 831 365 n/a 488 831 365

1985-86 538 532 042 n/a 538 532 042

1986-87 590 427 808 n/a 590 427 808

1987-88 636 717 377 n/a 636 717 377

1988-89 652 500 000 n/a 652 500 000

1989-90 677 739 860 n/a 677 739 860

1990-91 699 291 988 n/a 699 291 988

1991-92b 714 969 488 303 174 734 1 018 144 222

1992-93c 730 122 049 318 506 205 1 048 628 254

1993-94 737 203 496 322 065 373 1 059 268 869

1994-95 756 446 019 330 471 280 1 086 917 299

1995-96d 806 748 051 357 977 851 1 164 725 902

1996-97 833 693 434 369 934 312 1 203 627 746

1997-98 832 859 742 369 564 377 1 202 424 119

1998-99 854 180 951 379 025 226 1 233 206 177

1999-2000 880 575 142 390 737 104 1 271 312 246

2000-01 919 848 794 408 163 980 1 328 012 774

2001-02 965 841 233 428 572 178 1 394 413 411

2002-03 1 007 855 328 447 215 070 1 455 070 398

2003-04 1 039 703 554 461 347 062 1 501 050 616

2004-05 1 077 132 883 477 955 558 1 555 088 441

2005-06 1 121 079 905 497 456 144 1 618 536 049

2006-07 1 168 277 369 518 399 049 1 686 676 418

2007-08 1 234 986 007 547 999 635 1 782 985 642

2008-09 1 621 289 630 719 413 921 2 340 703 551

2009-10 1 378 744 701 611 789 598 1 990 534 300

2010-11 1 446 854 689 642 012 005 2 088 866 694

2011-12 1 856 603 939 823 829 803 2 680 433 742

2012-13e 743 941 198 330 108 602 1 074 049 800

Total 26 799 222 135 8 901 780 662 35 701 002 797

Note: a Grants t o the Northern Territory under the programme commenced in 1979-80, with the initial allocation being $1 061 733. b Bef ore 1991-92, local road funding was provided as tied grants under different legislation (n/a = Not applicable). c In 1 992-93, part of the road grant entitlement of the Tasmanian and Northern Territory governments was

reallocated to local government in these jurisdictions. d Gran ts to the Australian Capital Territory under the programme commenced in 1995-96, with the initial allocation being $13 572 165 in general purpose and $11 478 714 in local road. e F or 2012-13 the national grant allocation is the estimated entitlement. The Bring Forward is included in the

year in which it was paid.

Source: Depar tment of Infrastructure and Regional Development.

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02 â¢ Financial assistance grants to local government

National Principles for the allocation of grants under the Local Government (Financial Assistance) Act The Act requires the Australian Government minister (the Minister) to formulate national principles in consultation with state and territory ministers for local government and a body or bodies representative of local government. The National Principles provide guidance for the states and the Northern Territory in allocating financial assistance grants to local governing bodies within their jurisdiction.

The National Principles came into effect in 1996-97. In 2005-06 the Minister formulated an additional national principle, to take effect from 1 July 2006, with respect to local governing bodies formed as a result of amalgamation.

The National Principles are set out in full at Appendix A.

Determining the distribution of grants within jurisdictions Under ss. 11 and 14 of the Act, financial assistance grants can only be paid to jurisdictions (other than the Australian Capital Territory) that have established a local government grants commission (see ‘Local government grants commissions’, on page 28).

The Australian Capital Territory does not have a local government grants commission because its government provides local government services in lieu of the territory having a system of local government. The local government grants commissions make recommendations, in accordance with the National Principles, on the quantum of the financial assistance grant allocated to local governing bodies.

The state and Northern Territory governments determine the membership of, and provide resources for, their respective local government grants commissions.

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Local Government National Report 2011-12

LOCAL GOVERNMENT GRANTS COMMISSIONS

Section 5 of the Local Government (Financial Assistance) Act 1995 (Cwlth) specifies the criteria a body must satisfy to be recognised as a local government grants commission. These criteria are:

â¢ the bo

dy is established by a law of a state or the Northern Territory

â¢ the pr

incipal function of the body is to make recommendations to the state or territory government about provision of financial assistance to local governing bodies in the state or territory

â¢ the Minist

er is satisfied that the body includes at least two people who are or have been associated with local government in the state or territory, whether as members of a local governing body or otherwise.

Section 11 of the Local Government (Financial Assistance) Act 1995 (Cwlth) requires local government grants commissions to:

â¢ hold pu

blic hearings in connection with their recommended grant allocations

â¢ pe

rmit or require local governing bodies to make submissions to the commission in relation to the recommendations

â¢ mak

e their recommendations in accordance with the National Principles.

The legislation establishing local government grants commissions in each state and the Northern Territory are:

New South Wales Local Government Act 1993

Victoria Victoria Grants Commission Act 1976

Queensland Local Government Act 1993

Western Australia Local Government Grants Act 1978

South Australia South Australian Local Government Grants Commission Act 1992

Tasmania State Grants Commission Act 1976

Northern Territory Local Government Grants Commission Act 1986

Once each local government grants commission determines the recommended allocation of grants to local governing bodies in its jurisdiction, the relevant state or Northern Territory minister recommends the allocation to the Australian Government Minister (the Minister) responsible for local government for approval. The Act requires that the Minister is satisfied that the state and the Northern Territory have adopted the recommendations of their local government grants commission.

Section 15 of the Act requires that, as a condition for paying the grants to the states and the Northern Territory, the states and the Northern Territory must pay the grants to local government without undue delay and without conditions, thus giving local government discretion to use the funds for local priorities.

Further, the Act requires the state and Northern Territory treasurers to give the Minister, as soon as practicable after 30 June each year, a statement detailing payments made to local

29

02 â¢ Financial assistance grants to local government

government during the previous financial year, including the date the payments were made, as well as a certificate from their respective Auditor-General certifying that the statement is correct.

The grants are paid to the states and the Northern Territory in equal instalments each quarter. The first payment for each financial year is paid as soon as statutory conditions are met. One of the requirements of the Act is that the first payment cannot be made before 15 August.

Bodies eligible to receive financial assistance grants All local governing bodies constituted under state and territory local government Acts are automatically local governing bodies. In addition, s. 4(2)(b) of the Act provides for:

â¢ a body declared by the Minister, on the advice of the relevant state minister, by notice published in the Gazette, to be a local governing body for the purposes of this Act.

In addition to the Australian Capital Territory, 565 local governing bodies, including 10 declared local governing bodies made eligible under s. 4(2)(b), received grants in 2011-12 (Table 2.6).

Table 2-6 Distribution of local governing bodies, by type and jurisdiction, at 1 July 2012

Type NSW Vic. Qld WA SA Tas. NTc Total

Local governmentsa 152 79 73d 138 68 29 16 555

Declared local governing bodiesb 3 0 0 0 6e 0 1 10

Total 155 79 73 138 74 29 17 565

Notes: a These are local go verning bodies, eligible under s. 4(2)(a) of the Local Government (Financial Assistance) Act 1995 (Cwlth), as they are constituted under state or territory legislation.

b These are decla red local governing bodies under s. 4(2)(b) of the Local Government (Financial Assistance) Act 1995 (Cwlth).

c Includ es the amalgamations that took effect in the Northern Territory on 1 July 2008 (see ‘Measures to improve the efficiency and effectiveness of local government in delivering services’ in Chapter 3 of this report) and includes the Northern Territory Road Trust Account.

d Includes the tw o Indigenous local governments established under distinct legislation, as reported in Chapter 4 of this report, Table 4.1.

e Includes the tw o Indigenous local governing bodies established under distinct legislation, as reported in Chapter 4 of this report, Table 4.1.

Source: Depar tment of Infrastructure and Regional Development.

The shires of Christmas Island and Cocos (Keeling) Islands are part of Australia’s Indian Ocean Territories. They are not entitled to receive funding under the Act but receive the equivalent of financial assistance grant payments.

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Local Government National Report 2011-12

FINANCIAL ASSISTANCE TO AUSTRALIA’S TERRITORIES

Under an arrangement between the Australian Government and the Western Australian Government, the Western Australian Local Government Grants Commission provides an annual assessment of the general purpose and local road grants for the shires of Christmas Island and Cocos (Keeling) Islands. The commission determines the grant allocations as if these areas were local governing bodies in Western Australia. This is done on the basis that funding from the Australian Government for these territories should allow them to provide municipal services that align with communities in Western Australia.

Under an arrangement between the Australian Government and the New South Wales Government, the New South Wales Local Government Grants Commission provides an annual assessment of the funding that would be allocated for the Wreck Bay Aboriginal Community Council in the Jervis Bay Territory as if that council were a local governing body in New South Wales. This is done on the basis that funding from the Australian Government to the Wreck Bay Aboriginal Community Council would allow it to provide municipal services that align with communities in New South Wales.

On the basis of these assessments, the Australian Government provides funding for the shires of Christmas Island and Cocos (Keeling) Islands as well as the Wreck Bay Aboriginal Community Council. The funding comes from a separate budget allocation to that provided under the Local Government (Financial Assistance) Act 1995 (Cwlth).

The funding provided in 2011-12 was:

â¢ J

ervis Bay Territory - $80 660 in general purpose grants

â¢ Christmas Island Shire

Council - $2 859 160 in general purpose grants and $362

272

in local road grants

â¢ Co

cos (Keeling) Islands Shire Council - $1 784 234 in general purpose grants and $123 898 in local road grants.

Methodologies of local government grants commissions Local government grants commissions each have their own methodology for allocating grants to local government in their jurisdiction.

For allocating general purpose grants, local government grants commissions assess the amount each local government would need to be able to provide a standard range and quality of services while raising revenue from a standard range of rates and other income sources. The local government grants commissions then develop recommendations taking account of each local governing body’s assessed grant need. The recommended allocation of the local road component is based on the local government grants commissions’ assessments of local governing bodies’ road expenditure need. The local government grants commissions are required to make their recommendations in line with National Principles for the allocation of grants under the Act.

Local government grants commissions meet annually at a national conference to share insights and discuss common issues. The 2011 conference was held in South Australia. The conference

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02 â¢ Financial assistance grants to local government

included discussions from the national perspective on growth and whether each state’s methodology was doing what they wanted it to do.

A detailed description of each local government grants commission’s methodology can be found in Appendix B.

Further information about local government grants commissions can be found on the internet (see ‘Internet addresses for local government grants commissions’, below) and in Appendix C.

INTERNET ADDRESSES FOR LOCAL GOVERNMENT GRANTS COMMISSIONS

Local government grants commission Internet address New South Wales www.dlg.nsw.gov.au/dlg/dlghome/dlg_Commission TribunalIndex. asp?areaindex=GC&index=21

Allocation of grants to local government in 2011-12 The Australian Government Minister (the Minister) approved the allocation of financial assistance grants to local governing bodies for 2011-12 as recommended by local government grants commissions through state and Northern Territory ministers. Appendix D contains the actual entitlements for 2011-12 and the estimated entitlements for 2012-13.

Table 2.7 sets out the average general purpose grant per capita to local governing bodies by jurisdiction and the Australian Classification of Local Governments (Appendix F provides a description of the classifications). Table 2.8 provides the average local road grant per kilometre by jurisdiction and classification. The Australian Classification of Local Governments was developed to aid comparison of similar local governing bodies. It is used here to indicate trends and allow comparison of grants to individual local governing bodies with the average for their category.

The results in Table 2.7 and Table 2.8 suggest there are some differences in outcomes between jurisdictions. Notwithstanding the capacity of the classification system to group similar local governing bodies, it should be noted that considerable scope for divergence within these categories remains. For this reason, the figures should only be taken as a starting point for enquiring into grant outcomes. This divergence can occur because of factors including isolation, population distribution, local economic performance, daily or seasonal population changes, age of population and geographic differences. Divergence can also occur because of variations between jurisdictions of the relative ranking within the jurisdiction on the basis of need of the different classification categories.

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Local Government National Report 2011-12

Table 2-7

Average general purpose grant per capita to local governing bodies by jurisdiction and by classification, 2011-12

Reviews of grants commission methodologies Local government grants commissions have programmes for monitoring grant outcomes and refining aspects of their allocation methodologies. However, from time to time it is appropriate for local government grants commissions to undertake a thorough review of their allocation methodologies.

Since the Act commenced in July 1995, most local government grants commissions have undertaken major reviews of their methodologies, are currently undertaking such examinations or have such activities planned (Table 2.10).

The need to review methodologies was reinforced by the 2001 Commonwealth Grants Commission review of the operations of the Act. The review identified the need to revise methodologies to achieve consistency with the principles of relative need, other grant support and Aboriginal peoples and Torres Strait Islanders (Commonwealth Grants Commission 2001).

Table 2-10 Status of most recent major methodology reviews, by state, as at 30 June 2012

State General purpose grants Local road grants

NSW Revenue assessment during 2010-11. None planned

Vic. Completed in May 2001 and implemented from 2002-03. Review of revenue component completed in 2004 and implemented over four years from 2005-06.

Completed in July 1999 and implemented from 2001-02.

Qld Completed in 2010 and implemented from 2011-12. Completed in December 2002 and implemented from 2004-05.

WA Completed in May 2012 and will be implemented in 2012-13. None planned.

SA Major review commenced in 2011-12, including a full review of the allocation of general purpose grants and the allocation of grants to the five Aboriginal communities and the Outback Community Authority.

None planned.

Tas. A triennial review was implemented in 2009-10. Last triennial review completed during 2011-12 and will be implemented in 2012-13.

Triennial review was implemented in 2009-10. Next triennial review was completed during 2011-12 and will be implemented in 2012-13.

NT Review of methodology completed in 2004-05 and implemented over five years from 2005-06. None planned.

Source: Department of Infrastructure and Regional Development.

39

02 â¢ Financial assistance grants to local government

Impact of local government grants commission capping policies Year-to-year variations in the data local government grants commissions use to determine allocation of grants can lead to significant fluctuations in grants for individual local governing bodies. Changes in local government grants commission methodologies for improving allocation of grants most likely to achieve horizontal equalisation can also lead to fluctuations. As unexpected changes in grants can impede local governments’ efficient planning, local government grants commissions have adopted policies to ensure changes are not unacceptably large.

Many local government grants commissions average the data of several years to reduce fluctuations. Nevertheless, policies to limit changes, by capping increases or decreases, may be needed to limit year-to-year variations.

No local governing body receives less than the minimum grant, so local governing bodies on the minimum grant are exempt from capping. In some circumstances, a local government grants commission may decide a local governing body’s grant should not be capped. Usually, this is to allow a larger grant increase than would otherwise be possible.

03

Local government efficiency and performance

42

Local Government National Report 2011-12

43

Local government efficiency and performance

03

Under s. 16 of the Local Government (Financial Assistance) Act 1995 (Cwlth) (the Act), an annual report must be made to Parliament on the operations of the Act. The report must include an assessment based on comparable national data of the performance of local governments, including their efficiency.

Previous Local Government National Reports have identified the difficulty of basing an assessment on comparable national data, due in large part to the different arrangements each state has to collect and report on local government performance.

Each year the jurisdictions are asked to report on measures undertaken to improve local government efficiency and performance. For this National Report, jurisdictions were asked to provide reports on:

â¢ developments in local government’s use of long-term financial and asset management plans — in particular, any developments in the implementation of the Local Government Financial Sustainability Nationally Consistent Frameworks should be identified

â¢ reforms undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery.

Long-term financial and asset management Across the three spheres of government in Australia, there is a clear focus on encouraging local government to pro-actively manage its community’s assets and improve its long-term financial planning.

Jurisdictions were asked to provide reports on developments in local government’s use of long-term financial and asset management plans that, in particular, identified any developments in the implementation of the Local Government Financial Sustainability Nationally Consistent Frameworks during 2011-12. The Local Government Financial Sustainability Nationally Consistent Frameworks include:

â¢ Criteria for Assessing Financial Sustainability

â¢ Asset Planning and Management

â¢ Financial Planning and Reporting.

Further information about each state and territory government submission for the report is provided in Appendix B.

44

Local Government National Report 2011-12

New South Wales In New South Wales, an integrated planning and reporting (IP&R) framework was introduced in 2009. The IP&R framework was designed to improve councils’ strategic community planning, including long-term financial and asset management planning, as well as streamline reporting to the community.

A peer review programme is being trialled to assist in the completion of this work, involving participation by 40 local government practitioners from across the state. All New South Wales councils (including county councils) commenced under the IP&R framework on 1 July 2012.

Victoria The Victorian Government continues to assist councils to reform their business practices. In 2011-12, Local Government Victoria supported the Municipal Association of Victoria (MAV) in the successful delivery of the Regional Asset Management Program and the Local Government Sustainability Program. These two important programmes, funded by the Australian Government, were aimed at improving business practices and building local capacity.

Queensland To progress the national local government sustainability agenda, the Queensland Department of Local Government implemented the sustainability and reporting process that emphasises sustainable communities and sustainable local governments.

In 2011-12, 59 of the 73 local governments submitted data to the Department for the Financial Management (Sustainability) (FMS) evaluation, which evaluates whether a council has a clear and coherent long-term financial management (sustainability) strategy in place; this is defined as the ability to maintain financial and infrastructure capital over the long term.

Combined funding to the Advancing Asset Management in Local Government (Qld) Project from the Australian Government, the Queensland Government, Queensland councils and the Local Government Association of Queensland (LGAQ) amounted to approximately $3.2 million. The outputs of the project were intended to meet the Australian Government’s two main objectives (integration and collaboration) and improve the ability of Queensland’s local governments to manage their assets and provide better outcomes for local communities by ensuring effective asset management and financial planning processes and allowing them to anticipate infrastructure needs.

The project, which was delivered by LGAQ in partnership with the state government, promoted and accelerated the implementation of integrated asset and financial management systems by developing core asset management plans for key infrastructure assets.

Western Australia The Western Australian Government continued to support the implementation of the Integrated Planning and Reporting (IPR) Framework and Guidelines in 2011-12.

In August 2011, the Western Australian Government enacted regulations under the Plan for the Future provisions of the Local Government Act 1995 (WA) that will require all local governments

45

03 â¢ Local government efficiency and performance

to develop Strategic Community Plans and Corporate Business Plans that are informed by Long Term Financial Plans and Asset Management Plans.

In preparing the local governments for this change, an advisory standard outlining minimum standards for integrated planning performance was published. The advisory standard and related guidelines align these activities with the Local Government Financial Sustainability Nationally Consistent Frameworks. In addition, the Western Australian Government worked with the Local Government Managers Australia (WA) and the Western Australian Local Government Association (WALGA) to deliver masterclasses and workshops on Integrated Planning, Asset Management Planning and Long Term Financial Planning to local government councillors and practitioners to further support this important initiative.

South Australia In South Australia, all of the 68 local governments have developed and adopted a long-term financial plan and an infrastructure and asset management plan covering a period of at least 10 years, as required by s. 122 of the Local Government Act 1999 (SA). Through the Australian Government’s Local Government Reform Fund, subsidised training has been provided to councils as well as additional material support such as the updated suite of Financial Sustainability Information Papers that reflect the Local Government Financial Sustainability Nationally Consistent Frameworks.

Tasmania The Tasmanian Government has developed a Financial Sustainability Framework for Local Government, which aligns with the Local Government Financial Sustainability Nationally Consistent Framework, and has commenced amendments to the Local Government Act 1993 (Tas.) to allow for, and mandate, long-term financial and asset management planning for all Tasmanian councils. The proposal has been endorsed by the Premier’s Local Government Council and will ensure that the financial and asset management practices of Tasmanian councils are viable and sustainable into the future.

Northern Territory In the Northern Territory, significant advancements in asset management practices for local government authorities were achieved in 2011-12 in line with the National Partnership Agreement to Support Local Government and Regional Development.

During the year, the Department of Local Government in the Northern Territory worked in partnership with the Local Government Association of the Northern Territory to deliver a range of activities aimed at enhancing their financial understanding and skills.

Australian Capital Territory The Australian Capital Territory has a Legislative Assembly that combines state and local government functions. However, the Australian Capital Territory does not have local government status as such. The local government functions are delivered by a number of directorates, including Territory and Municipal Services, which delivers the bulk of local government functions

46

Local Government National Report 2011-12

to ensure that the government’s many infrastructure assets are strategically planned, built and maintained.

Local Government Reform Fund The Local Government Reform Fund was introduced in 2009. It provides $25 million to improve the asset and financial management capabilities of councils around Australia. It also encourages greater collaboration between councils and provides nationally consistent data to enable the performance of councils to be measured. Under phase two of the Local Government Reform Fund, the Australian Government approved projects to states and territories worth $2.6 million: see table 3.1 below.

Quality Measurement of Asset and Financial Management Data in Local Government $200 000 29 June 2012 30 June 2013

Queensland Government

Improving Asset Management in Indigenous Local Government - Pilot: Community Responsibility in Management Assets

$320 000 20 June 2012 30 June 2013

South Australian Government Improving SA Councils’ Asset and Financial Management Practices

$910 000 20 June 2012 30 June 2013

Western Australian Government Western Australian Local Government Service in Aboriginal Communities

$1 100 000 3 July 2012 30 June 2013

Total $2 630 000

Source: Department of Infrastructure and Regional Development

Comparative performance measures between local governing bodies All local governments have a legal requirement, under their state local government Acts, to report on their performance. These reports may be in the form of annual reports, performance statements, financial statements and/or strategic planning reports.

While not all performance information is publicly available, some states provide a comparative analysis of local governments under their jurisdiction. This information is collected by either the responsible state or territory agency or by grants commissions.

47

03 â¢ Local government efficiency and performance

For this National Report, state governments and local government associations were asked to report on measures undertaken in 2011-12 to develop and implement comparative local government performance indicators. A summary of these reports for each state follows.

New South Wales The New South Wales Division of Local Government, Department of Premier and Cabinet published the Comparative Information on New South Wales Local Government Councils. The 2011-12 report has a new look and includes information about a proposed performance measurement framework. The publication is available at www.dlg.nsw.gov.au.

Data sources include council financial reports, rating records and Australian Bureau of Statistics population data. The information collected has also been used to calculate financial assistance grants, analyse councils’ financial health and check compliance of rates collected.

Victoria The Victorian Government has been working towards the development of a suite of performance benchmarks for local government. MAV and local government have been co-operatively involved in the development of these measures.

The Victorian Government publishes the Statewide Local Government Services Report, which measures community satisfaction with local government performance; and the Annual Community Satisfaction Survey, co-ordinated by Local Government Victoria from 2001 to 2011, which provides participating councils with performance results for the four areas of Overall Performance, Advocacy, Customer Contact and Engagement. The reports are available at www.dpcd.vic.gov.au.

Queensland In 2011-12, The Queensland Government continued to provide information to the community through the Queensland Local Government Comparative Information Report. This report assists local governments in their endeavours to develop new and more effective ways to deliver their services by providing an effective tool by which they can monitor trends over time and benchmark services performance both internally and with other councils.

Western Australia The Western Australian Government continued its implementation of the Performance Measurement Framework for local governments. This framework sets the direction and intent of the state government’s approach to measuring local government reform and capacity building against the requirements set out in the IPR Framework. The IPR Framework measures the sector’s performance on Strategic Community Planning, Workforce Planning, Financial Planning and Asset Management as an aggregated Capability Index. The Capability Index measures the proportion of local governments attaining a baseline level of capability.

48

Local Government National Report 2011-12

South Australia Each year the Local Government Association of South Australia (LGASA) assembles an update report that provides the latest values, history and comparisons of key financial indicators for the local government sector as a whole. The 2012 update report (covering the 11-year period from 1 July 2000 to 30 June 2011) included data on the operating surplus (deficit), net financial liabilities ratio and the operating surplus ratio for the sector as a whole. In addition, the association continues to extract workforce planning statistics from Local Government Grants Commission data and presents the information in graph and table form for councils seeking comparative statistics for their workforce planning.

Tasmania The Tasmanian Government now produces the Sustainability Objectives and Indicators (SOI) report to measure council performance on an annual basis. The SOI project forms part of the government’s Financial Sustainability Framework for Local Government, which has the overall objective of ensuring that the local government sector improves its sustainability and develops and improves its financial and asset management capability and capacity.

The project is anticipated to promote excellence in council performance and improve community engagement. It will also assist both state and local governments in Tasmania to set priorities for performance improvement within the sector.

Northern Territory In the Northern Territory all councils are required to report on their service delivery efforts in their annual reports.

The Northern Territory Department of Local Government and Regions has undertaken capacity development by working with shire councils to produce resources and hold workshops to develop the use of performance measures. All councils now use these measures as a way to report service delivery performance.

Measures to improve the efficiency and effectiveness of local government in delivering services

New South Wales The New South Wales Government and the local government sector met at the Destination 2036 event to discuss challenges that councils are facing and develop solutions for creating a stronger local government system (for more information, see Appendix B). The New South Wales Government will work with the local government sector on this key initiative to drive improvement to the delivery of efficient and effective local government services across the state.

Victoria The Victorian Government has undertaken a number of reviews and legislative changes that support improved service delivery, including by implementing a range of programmes in

49

03 â¢ Local government efficiency and performance

2011-12 to support councils in responding to natural disasters; bringing forward the date for local government general elections from November to October every four years, giving councillors more time to begin work on their four-year council plans and annual budgets; reviewing Victorian public libraries to consider relevant future services; and significantly reforming Victoria’s food safety regulatory framework by developing a single registration system for temporary and mobile food businesses and allowing councils to streamline inspection regimes.

Through the National Procurement Network, MAV Procurement established strong links with other state and territory local government association procurement divisions. This relationship realised some outstanding savings for Victorian councils by aggregating council requirements nationally, particularly in the fleet and heavy equipment areas.

Councils in MAV’s STEP Planning Process Improvement Program (STEP Planning) delivered significant improvements to permit assessment. The STEP is a low-cost, structured and supported way to regularly review and improve council planning services. Consistency of time frames increased and the time required to process straightforward applications reduced by 30 to 50 per cent, resulting in a reduction of application backlogs.

Queensland In Queensland, local governments currently participate in large-scale shared service arrangements primarily set up by the LGAQ as subsidiary companies. These companies provide a range of services including insurance, administrative, recruitment, infrastructure consultancy, procurement and information technology services.

In early 2012 LGAQ developed a comprehensive diagnostic tool and consulting advisory service, called the Efficiency Performance Scan, for Queensland local governments. The Efficiency Performance Scan has become an important means by which councils can be provided with a detailed measurement of performance and targeted advice to achieve efficiencies and continuous improvement.

LGAQ also provides Queensland local governments with a large suite of online resources to enable best practice templates and resources, and reduce duplication and unnecessary work.

Western Australia In Western Australia, general reforms undertaken in 2011-12 to improve the efficiency and effectiveness of service delivery focused on the integration of local government’s asset management, financial management and workforce management responsibilities with Strategic Community Plans.

During 2011-12, the Western Australian Government continued to implement its structural reform initiatives with 64 local governments that were progressing amalgamations, engaged in Regional Transition Groups to assess the benefits of amalgamations, engaged in Regional Collaborative Groups to identify opportunities for sharing services or supportive of structural reform but not able to form a group with neighbouring local governments.

Collaborative initiatives have been identified in areas such as regional waste management, town planning, human resources, integrated planning and reporting, information technology and better practice processes. Two groups comprising seven local governments have completed the business planning process and commenced implementation.

50

Local Government National Report 2011-12

South Australia Local Government Association of South Australia continued to assist councils to improve efficiency and effectiveness through a range of measures, including the provision of model governance documents; the establishment of a review of a suite of procurement documents; and the provision of procurement services for networked library management systems. Also, the roll-out of Unity Dynamic Council Websites (DCW) delivered upgrades to more than 60 councils. Further assistance through technology included the Emergency Assessment and Reporting System (EARS) project using smart phone and cloud technologies and a central database to better connect councils in the event of emergencies.

The development of a new Local Government Planning Reform Agenda commenced in March 2012. The reform agenda provides a strategic framework for prioritising and co- ordinating a response to the key issues that are affecting councils.

In addition, an expert panel, appointed to consider the future roles and functions of councils in South Australia under the LGASA Local Excellence program, was announced at the LGASA General Meeting in April 2012. It is expected to deliver a report in 2013 that will consider, the role and functions of councils and engagement and business practices.

Tasmania The Tasmanian Government established the two-phase Role of Local Government project in April 2012. The project aims to establish a clear understanding of the role and capabilities of local government; identify strengths and capability gaps; and develop actions to build a sector that is sustainable, efficient, effective and responsive to community needs. Phase 1 of the project concluded in December 2012 when the Premier’s Local Government Council approved eight role statements describing the role of local government. Information on the project is available at www.dpac.tas.gov.au.

Northern Territory In the Northern Territory during 2011-12, shire councils worked co-operatively at a regional level to identify ways to improve the efficiency and effectiveness of service delivery. Some common themes were:

â¢ joint procurement of insurance services

â¢ specialised machinery

â¢ building and maintenance services

â¢ legal and consultancy services

â¢ shared service delivery arrangements such as waste management and animal management services

â¢ sharing of specialised staff, such as engineers, across a number of local governments

â¢ reduction of the need for cross-subsidisation due to inadequate agency management fees by introducing joint negotiations with government service funders

â¢ initiatives in local government service delivery to Aboriginal and Torres Strait Islander communities.

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03 â¢ Local government efficiency and performance

Local government amalgamations Table 3.2 shows changes in the number of councils in Australia at various times since 1910.

Table 3-2 Number of local governments, by state, 1910 to 2012

State 1910a 1991a 2001b 2008* 2012*

NSW 324 176 172 152 152

Vic. 206 210 79 79 79

Qld 164 134 125 73 73

WA 147 138 142 140 138

SA 175 122 68 68 68

Tas. 51 46 29 29 29

NT n/a n/a 7 61 16

Total 1 067 826 622 602 555

Notes: * Ne w South Wales total excludes Silverton and Tibooburra villages and Lord Howe Island; the South Australian total excludes the five Indigenous local governing bodies and the Outback Areas Community Development Trust; and the Northern Territory total excludes the Trust Account.

n/a no t applicable.

Sources: a Spr oats, K 1996, Comparison of agendas and processes in Australian Local Government, paper presented to the Local Government in Queensland Centenary Conference, August 1996, p. 5.

b National Office of Local Government, from information provided by state local government associations and individual councils (totals exclude Indigenous and other local governing bodies receiving federal financial assistance grants).

Structural reform processes have been implemented in most states since the 1990s, generally with the intention of restructuring to improve the performance and cost-effectiveness of local governments.

A report released by the Australian Centre for Excellence in Local Government (ACELG) in May 2011 provided options for ‘consolidation’ in local government, including shared services delivery, regional collaboration, boundary adjustment and amalgamation of councils. The full report and detailed case studies can be downloaded from the ACELG website at www.acelg.org.au.

52

Local Government National Report 2011-12

04

Local government service provision to Indigenous communities

54

Local Government National Report 2011-12

55

Local government service provision to Indigenous communities

04

Reporting requirements Section 16 of the Local Government (Financial Assistance) Act 1995 (Cwlth) (the Act) requires an assessment, based on comparable national data, of the delivery of local government services to Aboriginal and Torres Strait Islander communities.

During 2011-12, states and local governments pursued initiatives aimed at promoting the delivery of local government services to Indigenous people. Appendix B contains reports prepared by state governments and local government associations on these initiatives. A summary of key initiatives is also provided later in this chapter.

Closing the Gap In 2008, the Council of Australian Governments (COAG) agreed to six ambitious targets for closing the gap between Indigenous and non-Indigenous Australians in urban, rural and remote areas. The six COAG targets were:

â¢ to close the gap in life expectancy between Indigenous and non-Indigenous Australians by 2031

â¢ to halve the gap in mortality rates for Indigenous children under five by 2018

â¢ to ensure access to early childhood education for all Indigenous four-year-olds in remote communities by 2013

â¢ to halve the gap in reading, writing and numeracy achievement for Indigenous children by 2018

â¢ to halve the gap in year 12 or equivalent attainment rates for Indigenous young people by 2020

â¢ to halve the gap in employment outcomes between Indigenous and non-Indigenous Australians by 2018.

Closing the Gap acknowledges that, to improve opportunities for Indigenous Australians, intensive and sustained effort is required from all levels of government. Funding to make long-term improvements has been committed in the following areas:

â¢ Closing the Gap in Indigenous Health Outcomes

â¢ Supporting Indigenous Early Childhood Development

â¢ Improving Remote Indigenous Housing

â¢ Investments in Schooling

â¢ New Remote Service Delivery Model.

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Local Government National Report 2011-12

A Single Government Interface, which includes a Government Business Manager and Indigenous Engagement officer, is operating in 29 priority locations in 2011-12. This interface is supported by six Regional Operations Centres staffed by Commonwealth and state/territory officers.

Boards of Management in each jurisdiction and community members made an important contribution through the development and implementation of Local Implementation Plans.

In addition to the substantial contributions made by the Australian and state governments, local government plays an important role in achieving the Closing the Gap targets.

State and local government initiatives An outline of key activities undertaken by states and local government associations in improving the provision of local government services to Indigenous people in 2011-12 follows.

New South Wales In New South Wales, all councils are required to prepare Integrated Planning and Reporting (IP&R) plans to facilitate community strategic planning and delivery of council services to best meet community needs.

The IP&R guidelines include the requirement for a community strategic plan to be developed in consultation with local community groups. The guidelines are based on principles of social justice, including consideration of the needs of Aboriginal and Torres Strait Islander people within each local community.

The New South Wales Government will be seeking to renew the IP&R guidelines in 2012-13 to ensure that the needs of the community, including Aboriginal and Torres Strait Islander communities, are being captured.

Victoria In Victoria, there are a number of initiatives between local government and Aboriginal communities. There is considerable sector-wide interest in developing stronger links with the Aboriginal community, including by establishing Indigenous Special Interest Groups such as the Local Government Professionals.

The state government has also funded Reconciliation Victoria, which is currently undertaking the Reconciliation in Local Government Victoria project. The aim of the project is to explore the usefulness, advantages and limitations of the Reconciliation Action Plan tool for Victorian Local Governments to advance reconciliation between Aboriginal and Torres Strait Islander peoples and other Australians.

In June 2011, the Minister for Local Government and Aboriginal Affairs announced the establishment of the Local Government Aboriginal Partnership Project. The project brought together a partnership of Aboriginal people, the Municipal Association of Victoria, the Victorian Local Governance Association, Local Government Professionals, Reconciliation Victoria and all three levels of government.

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04 â¢ Local Government service provision to Indigenous Communities

Queensland In Queensland, the Local Government Association of Queensland (LGAQ) is assuming greater responsibility in representing and advocating on behalf of Queensland’s Indigenous councils following the demise of the Aboriginal Coordinating Council - their former peak organising body. LGAQ has continued to convene the bi-annual Indigenous Leaders’ Forum (ILF). The ILF held in May 2012 in Cairns attracted 67 participants, with representatives from all of the 16 Queensland Indigenous councils. State and federal ministers regularly attend the ILF to converse with the delegates on various matters raised.

LGAQ and Arup Group Limited developed and produced Preparing a Planning Scheme: A guide for Aboriginal and Torres Strait Islander Councils in 2011. This guide clearly identified local government responsibilities in planning and development, demonstrated the benefits of a planning scheme and provided a step-by-step outline and other practical tools to help integrate a planning scheme with other Indigenous Council business. The guide was warmly welcomed by Indigenous councils.

Western Australia In Western Australia, there was continued progress during 2011-12 towards the development of a proposal for local government delivery of municipal services in Aboriginal communities across remote Western Australia as part of the Local Government Services in Aboriginal Communities Project, in accord with commitments in the National Partnership Agreement on Remote Indigenous Housing (2009). The state and Australian governments agreed to work together towards developing new arrangements, including clearer roles and responsibilities and funding for municipal services in Aboriginal communities.

The Western Australian Government, through its Royalties for Regions program, made financial assistance available to 22 local governments in remote and regional Western Australia to undertake a scoping and costing study of local governments delivering municipal services in Aboriginal communities. This study commenced in 2010-11 and was finalised in November 2011. The study examined the asset and operational requirements for local governments to deliver a suite of municipal services in Aboriginal communities. The Western Australian Government is maintaining specialist staff in policy and project management to support this project.

South Australia In South Australia, support continues to be provided to councils involved in native title processes. In particular, support is given to the 27 councils involved in Indigenous land use agreement negotiations in the Kaurna region.

Tasmania In Tasmania there were no specific local government initiatives undertaken in 2011-12 in relation to service delivery to the Aboriginal and Torres Strait Islander communities.

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Northern Territory In the Northern Territory, all councils undertook activities to enhance their delivery of services. The benefits of enhanced service delivery directly flow to the Indigenous communities in the Northern Territory.

Australian Capital Territory In the Australian Capital Territory (ACT), the Office of Aboriginal and Torres Strait Islander Affairs provides strategic advice to the ACT Minister for Aboriginal and Torres Strait Islander Affairs on issues affecting Aboriginal and Torres Strait Islander people living in the ACT. The office co-ordinates a whole-of-government approach to issues affecting Aboriginal and Torres Strait Islander residents and provides secretariat and administrative support to the Aboriginal and Torres Strait Islander Elected Body and the United Ngunnawal Elders Council; it also administers the ACT Aboriginal and Torres Strait Islander Traineeship Program - an entry level program for Aboriginal and Torres Strait Islander people who want to pursue a career in the ACT Public Service.

The ACT and Australian governments signed an Overarching Bilateral Indigenous Plan in March 2012. The plan encapsulates the ACT Government’s agreement to undertake annual reporting on Closing the Gap. On 11 June 2012, the Minister for Aboriginal and Torres Strait Islander Affairs released the ACT Closing the Gap Report 2012 on the ACT’s progress on seven COAG Closing the Gap building blocks. The ACT Closing the Gap Report 2012 is available at www.dhcs.act.gov.au/multicultural.

The President of the Australian Local Government Association (ALGA) is a member of COAG. ALGA supports the Closing the Gap initiative and notes the important role local government plays in service delivery for Indigenous communities. ALGA welcomes the invitation from Infrastructure Australia to work towards a tangible improvement in remote Indigenous service delivery and looks forward to projects that will flow from this exercise.

Australian Government expenditure and progress

Financial assistance grants to Indigenous local governing bodies Of the 565 local governing bodies that received financial assistance grants in 2011-12 under the Act, 31 were Indigenous (see Table 4.4).

To be eligible to receive funding under the Financial Assistance Grant programme, Indigenous local governing bodies must be established in one of three ways:

â¢ under a state government’s normal local government legislation; for example, the Aurukun and Mornington local governments in Queensland and the Ngaanyatjarraku local government in Western Australia

â¢ under a state government’s distinct legislation; for example, the Anangu Pitjantjatjara Yankunytjatjara (APY) and the Maralinga Tjarutja Councils in South Australia

â¢ following a declaration by the Australian Government minister, acting on advice from the state minister, that it is a local governing body for the purposes of the Local Government (Financial Assistance) Act.

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04 â¢ Local Government service provision to Indigenous Communities

Table 4.1 gives the distribution of the 31 Indigenous local governing bodies by jurisdiction and the means by which they became eligible for financial assistance grants.

Table 4-1 Distribution of Indigenous local governing bodies, by eligibility type and jurisdiction, at July 2012

State

Established under state local government legislation

(No.)

Established under distinct state legislation (No.)

Declared local governing bodies (No.)

Total Indigenous local governing bodies (No.)

Qld 16 0 0 16

WA 1 0 0 1

SA 0 2a 3 5

NT 9 0 0 9

Total 26 2 3 31

Notes: a Established under the Anangu Pitjantjatjara Yankunytjatjara Land Rights Act 1981 (SA) and the Maralinga TjarutjaLand Rights Act 1984 (SA).

Source: Depar tment of Infrastructure and Regional Development

During 2011-12, $48.9 million in financial assistance grants was provided to 31 Indigenous local governing bodies. Of this, $37.8 million was in general purpose grants and $11.1 million in local road grants. The specific grants provided to these Indigenous local governing bodies are shown in Appendix D and are identified by an asterisk (*) next to their name.

Allocation of general purpose payments to mainstream local governing bodies in relation to their Indigenous population In addition to the funding provided to Indigenous local governing bodies, some of the financial assistance grants funding received by mainstream local governing bodies is provided to reflect the number of Indigenous people within their boundaries.

When the allocation of financial assistance grants to local governing bodies is determined, local government grants commissions must comply with agreed distribution guidelines called National Principles (see Appendix A). For the general purpose grants, local government grants commissions apply cost adjusters where it has been determined that the cost of providing a local government service is affected by factors such as demographic profile, remoteness or climate.

National Principle 1 requires grants commissions to allocate the general purpose grant on the basis of relative needs. In addition, National Principle 5 relates specifically to Indigenous people:

Aboriginal Peoples and Torres Strait Islanders

Financial assistance shall be allocated to councils in a way, which recognises the needs of Aboriginal peoples and Torres Strait Islanders within their boundaries.

In complying with National Principle 5, some grants commissions apply cost adjusters reflecting the size of the Indigenous population of a local governing body when assessing the cost of providing certain services.

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In this way, grants commissions try to take into account the specific needs of Indigenous people and the subsequent effect on the finances of a local governing body - in terms of revenue received as well as expenditure requirements - when determining the financial assistance grant to be allocated.

National Awards for Local Government Through the National Awards for Local Government, the Australian Government recognises rewards and promotes the innovative work of local governments across Australia.

The 2012 awards supported significant projects that added value to local government and their regions with stand-out ideas and innovation. Over 370 entries were received. This was a tribute to the sector and proof of the growth in community-based initiatives to address the social, economic and environmental priorities of different regions.

In 2012, local councils were given the opportunity to enter a number of new categories, including:

Three of the award categories in particular recognised councils that worked together with Indigenous people.

The 2012 Engaging and Strengthening Indigenous Communities category winner was Clarence Valley Council in New South Wales. The council’s innovative Fresh Start Program is a school-to-work transition education programme for young Indigenous people and their families. The need for change was triggered by a combination of record Indigenous youth unemployment and a call from within the community to break barriers and connect young Indigenous people to meaningful futures. The Fresh Start Program builds community connections based on trust and linking young people to learning and encouraging them to aspire to achieve.

â¢ Cardinia Shire Council in Victoria, which developed the Playstart Van to increase social support networks for families and children through Playgroups in the Park. The Playstart Van can go anywhere, anytime, and is widely used within the council’s region

â¢ Barkly Shire Council in the Northern Territory, which introduced an animal programme to provide regular veterinary services within the Tennant Creek community, primarily to domestic dogs. The programme aims to reduce dog overpopulation, minimise the number of dog-related injuries to humans and improve the poor health of animals within the Barkly Shire. Initial results of the programme indicate marked improvement in general animal health, which is also flowing to human health in local Indigenous communities.

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The 2012 Promoting Reconciliation category award winners were:

â¢ Wellington Shire Council in Victoria, which promoted reconciliation by holding a conference to celebrate the strength of the Indigenous community and culture across Gippsland and beyond - the Deadly in Gippsland Conference - Promoting Reconciliation through Deep Listening in Action. The event highlighted ‘deadly’ (which is a colloquial word meaning awesome) work being accomplished by Indigenous people in their communities, promoting Indigenous talent and showcasing regional initiatives to build positive relationships between Indigenous and non-Indigenous people

â¢ East Arnhem Shire Council in the Northern Territory, passionate about the reconciliation process, which has firmly embedded the promoting reconciliation principle throughout the organisation. In 2011 East Arnhem developed and launched a Reconciliation Action Plan to formalise its commitment to the people of the region and to provide a framework for moving forward.

Details of all winners of the 2012 Awards are in the Australian Government publication National Awards for Local Government: 2012 Winners. Further information on the awards is available from the Department of Infrastructure and Regional Development website at www.infrastructure.gov.au.

APPENDIX

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A

According to s. 3 of the Local Government (Financial Assistance) Act 1995 (Cwlth), the federal Parliament provides financial assistance grants to the states and self-governing territories for the purpose of improving:

â¢ the financial capacity of local governing bodies

â¢ the capacity of local governing bodies to provide their residents with an equitable level of services

â¢ the certainty of funding for local governing bodies

â¢ the efficiency and effectiveness of local governing bodies

â¢ the provision, by local governing bodies, of services to Aboriginal and Torres Strait Islander communities.

The grants are provided to jurisdictions in the form of general purpose and local road grants. The intra-jurisdictional allocation of these grants to local governing bodies is made in accordance with recommendations of local government grants commissions with prior approval of the Australian Government minister (the Minister). In determining grant allocations, the commissions are required to make their recommendations in line with National Principles. The current National Principles are set out in Figure A.1.

The main objective of having National Principles is to establish a nationally consistent basis for distributing financial assistance grants to local government under the Act. The Act includes a requirement, under s. 6(1), for the Minister responsible for local government to formulate National Principles after consulting with jurisdictions and local government.

The formulated National Principles are a disallowable instrument. As such, any amendments, including establishment of new principles, must be tabled in both Houses of federal Parliament before they can come into effect. Members and senators then have 15 sitting days in which to lodge a disallowance motion. If such a motion is lodged, the respective House has 15 sitting days in which to put and defeat the disallowance motion. If the disallowance motion is defeated, the amendment stands. If the disallowance motion is passed, the amendment will be deemed to be disallowed.

National Principles for allocating general purpose and local road grants

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Figure A-1 National Principles for allocating general purpose and local road grants

A. General purpose grants

The National Principles relating to allocation of general purpose grants payable under section 9 of the Act among local governing bodies are as follows:

1. Horizontal equalisation

General purpose grants will be allocated to local governing bodies, as far as practicable, on a full horizontal equalisation basis as defined by the Act. This is a basis that ensures each local governing body in the state or territory is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the state or territory. It takes account of differences in the expenditure required by those local governing bodies in the performance of their functions and in the capacity of those local governing bodies to raise revenue.1

2. Effort neutrality An effort or policy neutral approach will be used in assessing the expenditure requirements and revenue-raising capacity of each local governing body. This means as far as practicable, that policies of individual local governing bodies in terms of expenditure and revenue effort will not affect grant determination.

3. Minimum grant

The minimum general purpose grant allocation for a local governing body in a year will be not less than the amount to which the local governing body would be entitled if 30 per cent of the total amount of general purpose grants to which the state or territory is entitled under section 9 of the Act in respect of the year were allocated among local governing bodies in the state or territory on a per capita basis.1

4. Other grant support

Other relevant grant support provided to local governing bodies to meet any of the expenditure needs assessed should be taken into account using an inclusion approach.2

5. Aboriginal peoples and Torres Strait Islanders

Financial assistance shall be allocated to councils in a way, which recognises the needs of Aboriginal peoples and Torres Strait Islanders within their boundaries.3

6. Council amalgamation

Where two or more local governing bodies are amalgamated into a single body, the general purpose grant provided to the new body for each of the four years following amalgamation should be the total of the amounts that would have been provided to the former bodies in each of those years if they had remained separate entities.

B. Identified local road grants The National Principle relating to allocation of the amounts payable under section 12 of the Act (the identified road component of the financial assistance grants) among local governing bodies is as follows:

1. Identified road component

The identified road component of the financial assistance grants should be allocated to local governing bodies as far as practicable on the basis of the relative needs of each local governing body for roads expenditure and to preserve its road assets. In assessing road needs, relevant considerations include length, type and usage of roads in each local governing area.

Notes:

1 Principles A1 and A3 reiterate principles that exist within the current legislation. Their inclusion in the National Principles contributes to the balance and completeness of the National Principles and allows for clarification of their definitions. The effect of Principle A3 is to provide each local governing body with a guaranteed minimum grant.

2 This Principle req uires recognition and application of certain relevant grants from other sources against council expenditure needs. The issue here is to account for revenue from other sources provided for the purpose of delivering certain local government services.

3 This Principle addresses t he specific need for provision of equitable council services to Aboriginal and Torres Strait Islander communities and indicates that the level of grants received by councils reflects the Aboriginal and Torres Strait Islander population within council boundaries.

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Appendix A

WHAT IS HORIZONTAL EQUALISATION?

Horizontal equalisation would be achieved if every council in a state, by means of reasonable revenue-raising effort, were able to afford to provide a similar range and quality of services. The Australian Government pursues a policy of horizontal equalisation when it distributes goods and services tax revenue to state and territory governments.

The Local Government (Financial Assistance) Act 1995 (Cwlth) requires the Minister, in formulating the National Principles, to have regard to the need to ensure the funds are allocated, as far as is practicable, on a full horizontal equalisation basis. Section 6(3) of the Act defines horizontal equalisation as being an allocation of funds that:

â¢ ensures each local governing body in a state is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the state

â¢ takes account of differences in the expenditure required to be incurred by local governing bodies in the performance of their functions and in their capacity to raise revenue.

Distribution of grants on the basis of horizontal equalisation is determined by estimating the costs each council would incur in providing a normal range and standard of services and by estimating the revenue each council could obtain through the normal range and standard of rates and charges. The grant is then allocated to compensate for variations in expenditure and revenue to (ideally) bring all councils up to the same level of financial capacity.

This means councils that would incur higher relative costs in providing normal services — for example, in remote areas (where transport costs are higher) or areas with a higher proportion of elderly or pre-school aged people (where there will be more demand for specific services) - will receive relatively more grant moneys. Similarly, councils with a strong rate base (highly valued residential properties, high proportion of industrial and/or commercial property) will tend to receive relatively less grant moneys.

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69

B

This appendix contains the submissions from each state and territory government and local government association. Headings have been standardised and minor edits made to achieve consistency in the report.

The Local Government (Financial Assistance) Act 1995 (Cwlth) requires that the relevant state and territory minister and bodies representative of local government be consulted when preparing this report.

During preparation of this report, state and territory governments and local government associations were asked for input on:

â¢ the methodology used for distributing local government financial assistance grants for 2011-12 — in particular, identifying any changes to the methodology from that used in 2010-11

â¢ developments in relation to local government’s use of long-term financial and asset management plans - in particular, identifying any developments in implementing the Local Government Financial Sustainability Nationally Consistent Frameworks

â¢ reforms undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery

â¢ initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities.

All state governments and the Northern Territory Government responded by directly addressing each issue.

Due to its special status as both a territory and a local government, the Australian Capital Territory was not required to directly address the issues. However, it did organise its response under two similar headings: the second, third and fourth issues regarding improving efficiency and effectiveness, use of long-term financial and asset plans and comparative performance indicators; and the sixth regarding improvement of services to Aboriginal and Torres Strait Islander communities.

While not required to do so, most local government associations also directly addressed the issues, except the first regarding methodology for distributing Australian Government financial assistance grants, which is primarily a state and Northern Territory government matter.

State and territory government and local government association submissions

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Report from the New South Wales Division of Local Government of the Department of Premier and Cabinet

Methodology for distributing financial assistance grants for 2011-12, including any changes in methodology from 2010-11 The New South Wales Local Government Grants Commission (NSW Commission) methodology has not changed significantly since last year. The two components of the grants are distributed on the basis of principles developed in consultation with local government and consistent with the National Principles of the Local Government (Financial Assistance) Act 1995 (Cwlth).

General purpose component

The general purpose component of the grant attempts to equalise the financial capacity of councils. The NSW Commission uses the direct assessment method. The approach taken considers cost disabilities in the provision of services on the one hand (expenditure allowances) and an assessment of councils’ relative capacity to raise revenue on the other (revenue allowances).

Expenditure allowances are calculated for each council for a selected range of council services. The allowances attempt to compensate councils for expected above average costs resulting from issues that are beyond their control. To be consistent with the effort neutral principle, council policy decisions concerning the level of service provided, or if there is a service provided at all, are not considered.

Expenditure allowances are calculated for 21 council services. These services are: general administration and governance, aerodromes, services for aged and disabled, building control, public cemeteries, services for children, general community services, cultural amenities, control of dogs and other animals, fire control and emergency services, general health services, library services, noxious plants and pest control, town planning control, recreational services, stormwater drainage and flood mitigation, street and gutter cleaning, street lighting, and maintenance of urban local roads, sealed rural local roads, and unsealed rural local roads.

An additional allowance is calculated for councils outside the Sydney statistical division that recognises their isolation.

The general formula for calculating expenditure allowances is:

No. of units Ã standard cost Ã disability factor

where:

â¢ the number of units is the measure of use for the service for the council; for most services the number of units is the population; for others it may be the number of properties or the length of roads

â¢ the standard cost represents the state average cost for each of the twenty-one selected services. The calculation is based on a state-wide average of councils’ net costs, excluding extreme values, using selected items from Special Schedule 1 of councils’ financial reports, averaged over five years

â¢ the disability factor is the measure of disadvantage for the council.

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Appendix B

A disability factor is the NSW Commission’s estimate of the additional cost, expressed as a percentage, of providing a standard service due to inherent characteristics that are beyond a council’s control. For example, if it estimated that it would cost a council 10 per cent more than the standard for town planning, because of an issue such as population growth in the council area, the disability factor would be 10 per cent. Consistent with the effort neutral principle, the NSW Commission does not compensate councils for cost differences that arise due to policy decisions of council, management performance or accounting differences.

For each service the NSW Commission has identified a number of variables that are considered to be the most significant in influencing a council’s expenditure on that particular service. These variables are termed ‘disabilities’. A council may have a disability due to inherent factors such as topography, climate, traffic, or duplication of services. In addition to disabilities identified by the NSW Commission, ‘other’ disabilities relating to individual councils may be determined. These may arise where unique circumstances have been identified as a result of council visits or special submissions.

The general approach to calculating a disability factor is to take each disability relating to a service and to apply the following formula:

â¢ the council measure is the individual council’s measure for the disability being assessed (for example, population growth)

â¢ the standard measure is the state standard (generally the average) measure for the disability being assessed

â¢ the weighting is meant to reflect the significance of the measure in terms of the expected additional cost. The weightings have generally been determined by establishing a factor for the maximum disability based on a sample of councils or through discussion with appropriate peak organisations.

Negative scores are not generally calculated. That is, if the council score is less than the standard, a factor of zero is substituted. The factors calculated for each disability are then added together to give a total disability factor for the service.

The NSW Commission uses the inclusion approach in the treatment of specific purpose grants for library services and local roads. This means the disability allowance is discounted by the specific purpose grant as a proportion of the standardised expenditure.

The deduction approach is used for services where the level of specific purpose payment assistance is related to council effort. This method deducts specific purpose grant amounts from all councils’ expenditure before standard costs are calculated. The NSW Commission considers the deduction approach to be more consistent with the ‘effort neutral’ requirement specified in the nationality principles.

The NSW Commission also calculates an allowance for additional costs associated with isolation. The isolation allowance is calculated using a regression analysis model based on the additional costs of isolation and distances from Sydney and major regional centres. Only councils outside the Sydney statistical division are included. Details of the formula are shown later in this section. An additional component of the isolation allowance is included which specifically recognises the additional industrial relations obligations of councils in western New South Wales.

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A pensioner rebate allowance is calculated which recognises that a council’s share of pensioner rebates is an additional cost. Councils with high proportions of ratepayers that qualify for eligible pensioner rebates are considered to be more disadvantaged than those with a lower proportion.

Revenue allowances attempt to compensate councils for their relative lack of revenue-raising capacity. Property values are the basis for assessing revenue-raising capacity because rates, based on property values, are the principal source of councils’ income. Importantly, property values are also considered to be a useful indicator of the relative economic strength of local areas.

The NSW Commission’s methodology compares land values per property for the council to a state standard value and multiplies the result by a state standard rate-in-the-dollar. For comparative purposes the NSW Commission purchases valuation data that has been calculated to a common base date for all councils by the Valuer-General. To reduce seasonal and market fluctuations in the property market, the valuations are averaged over three years. In the revenue allowance calculation, councils with low values per property are assessed as being disadvantaged and are brought up to the average (positive allowances), while councils with high values per property are assessed as being advantaged and are brought down to the average (negative allowances). That is, the theoretical revenue-raising capacity of each council is equalised against the state standard. The NSW Commission’s approach excludes the rating policies of individual councils (effort neutral).

Separate calculations are made for urban and non-urban properties. Non-rateable properties are excluded from the NSW Commission’s calculations because the calculations deal with relativities between councils, based on the theoretical revenue-raising capacity of each rateable property.

In developing the methodology, the NSW Commission was concerned that use of natural weighting would exaggerate the redistributive effect of the average revenue standards. That is, the revenue allowances are substantially more significant than the expenditure allowances. This issue was discussed with the Australian Government and the agreed principles provide that ‘revenue allowances may be discounted to achieve equilibrium with the expenditure allowances’ (see ‘Principle’ below). As a result, both allowances are given equal weight.

The discounting helps reduce the distortion caused to the revenue calculations as a result of the property values in the Sydney metropolitan area.

The objective approach to discounting revenue allowances reduces the extreme positives and negatives calculated, yet maintains the relativities between councils established in the initial calculation.

The NSW Commission does not specifically consider rate pegging, which applies in New South Wales. The property based calculations are essentially dealing with relativities between councils, and rate pegging affects all councils.

Movements in the grants are generally caused by annual variations in property valuations, standard costs, road and bridge length, disability measures and population.

The NSW Commission, because of the practical and theoretical problems involved, does not consider the requirements of councils for capital expenditure. In order to assess capital expenditure requirements the NSW Commission would have to undertake a survey of each council’s infrastructure needs and then assess the individual projects for which capital

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Appendix B

assistance is sought. This would undermine council autonomy, because the NSW Commission, rather than the council, would be determining which projects were worthwhile. Further, councils that had failed to adequately maintain their assets could be rewarded at the expense of those that did maintain them.

The issue of funding for local water and sewerage undertakings was examined during the process of consultation between the NSW Commission, the Local Government and Shires Associations, and local government generally.

The associations and local government recommended to the NSW Commission that water and sewerage services should not be included in the distribution principles because:

â¢ not all general purpose councils in New South Wales perform such services

â¢ the level of funds available for other council services would be significantly diminished if such services were considered

â¢ inclusion would result in a reduced and distorted distribution of funds to general purpose councils

â¢ the state government makes other sources of funds and subsidies available to councils for such service.

The NSW Commission agreed with the submissions of the associations and local government. Accordingly, water and sewerage services are excluded from the distribution formula.

The NSW Commission views income from council business activities as a policy decision and, therefore, does not consider it in the grant calculations (effort neutral). Similarly, losses are not considered either.

Debt servicing is related to council policy and is therefore excluded from the NSW Commission’s calculations. In the same way, the consequences of poor council decisions of the past are not considered.

Generally the levels of a council’s expenditure on a particular service do not affect grants. Use of a council’s expenditure is generally limited to determining a state standard cost for each selected service. The standard costs for these services are then applied to all councils in calculating their grants. What an individual council may actually spend on a service has very little bearing on the standard cost or its grant.

Efficient councils are rewarded by the effort neutrality approach to the calculations. To illustrate this, two councils with similar populations, road networks, property values, and disability measures would receive similar grants. The efficient council can use its grant funds to provide better facilities for its ratepayers. The inefficient council cannot provide additional services to its ratepayers. Therefore, the efficient council will benefit from its efficiency.

Council categories have no bearing on the grants. Categories simply provide a convenient method of grouping councils for analysis purposes.

Effective from 1 July 2006, the national principles embodied an amalgamation principle that states:

Where two or more local governing bodies are amalgamated into a single body, the general purpose grant provided to the new body for each of the four years following amalgamation should be the total of the amounts that would have been provided to the former bodies in each of those years if they had remained separate entities.

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Accordingly grants to councils affected by boundary changes are maintained at the previous year’s level if the outcome is a negative. No New South Wales councils currently require protection under this provision.

Local road component

The method of allocating the local road component is based on a simple formula developed by the New South Wales Roads and Traffic Authority. The formula uses councils’ proportion of the state’s population, local road length and bridge length. Details of the formula are discussed below under ‘Principles’.

Formulae

The formulae used to calculate expenditure and revenue allowances of the general purpose component follow.

Expenditure allowances

General

Allowances for most services are calculated on the following general formula:

Ac = Nc Ã Es Ã Dc

where: Ac = allowance for the council for the expenditure service

Nc = number of units to be serviced by council

Es = standard expenditure per unit for the service

Dc = disability for the council for service in percentage terms

Road length allowances

In addition to the disability allowances, road length allowances are calculated for each road type based on the following formula:

Ac = Nc Ã Es Ã Lc - Ls Nc Ns

where: Ac = allowance for road length allowance

Nc = number of relevant properties for the council

Es = standard cost per kilometre

Lc

= council’s relevant length of road per relevant property Nc

Ls

= standard relevant length of road per relevant property Ns

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Appendix B

Isolation allowances

Isolation allowances are calculated for all non-metropolitan councils based on the formula:

Ac = Pc Ã ([Dsc Ã K1] + [Dnc Ã K2] + Ic)

where: Ac = the isolation allowance for each council

Pc = the adjusted population for each council

Dsc = the distance from each council’s administrative centre to Sydney

Dnc = the distance from each council’s administrative centre to the nearest major regional centre (a population centre of more than 20 000)

The maximum value for Rc is set at $125. Tc and ts are calculated as for the revenue allowances except only residential properties are used.

Principles

General Purpose (Equalisation) Component

These principles, consistent with the National Principles of the Local Government (Financial Assistance) Act 1995 (Cwlth), are based on an extensive programme of consultation with local government.

The agreed principles are:

1. General purpose grants to local governing bodies will be allocated as far as practicable on a full equalisation basis as defined in the Local Government (Financial Assistance) Act 1995 (Cwlth); that is a basis which attempts to compensate local governing bodies for differences in expenditure required in the performance of their functions and in their capacity to raise revenue.

2. The assessment of revenue and expenditure allowances of local governing bodies will, as far as is practicable, be independent of the policy or practices of those bodies in raising revenue and the provision of services.

3. Revenue-raising capacity will primarily be determined on the basis of property values; positive and negative allowances relative to average standards may be calculated.

4. Revenue allowances may be discounted to achieve equilibrium with expenditure allowances.

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Appendix B

5. Generally for each expenditure function an allowance will be determined using recurrent cost; both positive and negative allowances relative to average standards may be calculated.

6. Expenditure allowances will be discounted to take account of specific purpose grants.

7. Additional costs associated with non-resident use of services and facilities will be recognised in determining expenditure allowances.

Local road component

Financial assistance, which is made available as an identified local road component of local government financial assistance, shall be allocated so as to provide Aboriginal communities equitable treatment in regard to their access and internal local road needs.

1. Urban [metropolitan] area

‘Urban area’ means an area designated as an ‘urban area’:

a. the Sydney Statistical Division

b. the Newcastle Statistical District

c. the Wollongong Statistical District

2. Rural [non-metropolitan] area

‘Rural area’ means an area not designated as an ‘urban area’

3. Initial distribution

a. 27.54 per cent to local roads in urban areas

b. 72.46 per cent to local roads in rural areas

4. Local road grant in urban areas

Funds will be allocated:

a. 5 per cent distributed to individual councils on the basis of bridge length

b. 95 per cent distributed to councils on the basis of:

i. 60 per cent distributed on length of roads

ii. 40 per cent distributed on population

5. Local road grant in rural areas

Funds will be allocated:

a. 7 per cent distributed to individual councils on the basis of bridge length

b. 93 per cent distributed to councils on the basis of:

i. 80 per cent distributed on length of roads

ii. 20 per cent distributed on population

6. Data

Population shall be based on the most up-to-date Estimated Resident Population figures available from the Australian Bureau of Statistics (ABS).

Road length shall be based on the most up-to-date data available to the Local Government Grants Commission of New South Wales for formed roads, which are councils’ financial responsibility.

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Bridge length shall be based on the most up-to-date data available to the Local Government Grants Commission of New South Wales for major bridges and culverts 6 metres and over in length, measured along the centre line of the carriageway, which are councils’ financial responsibility.

The method of application of the statistics shall be agreed to between representatives of the Local Government Grants Commission of New South Wales and the Local Government and Shires Associations of New South Wales.

Developments in relation to local government’s use of long-term financial and asset management plans, including any developments in implementing the Local Government Financial Sustainability Nationally Consistent Frameworks In 2009 an integrated planning and reporting (IP&R) framework was introduced into NSW. The IP&R framework was designed to improve councils’ strategic community planning, including long-term financial and asset management planning, as well as to streamline reporting to the community.

Rather than discouraging councils from investing in infrastructure and economic development activities, the framework is designed to ensure that councils approach these activities in a sustainable way, with a view to the future and to delivering outcomes for the community.

All NSW councils (including county councils) commenced under IP&R framework at 1 July 2012. A staged implementation occurred with the first councils producing their first set of IP&R documents in 2010. The NSW Division of Local Government supported the implementation of the framework through guidance, workshops and advice.

The NSW Division of Local Government has reviewed long term financial plans and asset management plans of each council gaining valuable insight into the effectiveness of the implementation of the plans. Each council received feedback outlining the areas identified as strengths, and those areas which require further development.

A peer review programme was trialled to assist in the completion of this work, with participation by 40 local government practitioners from across NSW.

Information provided by councils in relation to long-term financial planning and asset management planning has improved and will continue to do so as the NSW Division of Local Government continues to work closely with councils to ensure ongoing improvements across NSW.

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Measures undertaken to develop and implement comparative performance measures between local governing bodies

Local Government Performance Indicators

The New South Wales Division of Local Government, Department of Premier and Cabinet’s 2010-11 Comparative Information on New South Wales Local Government Councils marks the 21st year the publication has been produced. The report contains 19 performance indicators.

Data sources include council financial reports, rating records and Australian Bureau of Statistics’ population data. The information collected has also been used to calculate financial assistance grants, analyse councils’ financial health and check compliance of rates collected.

The 2010-11 publication continues to produce time series data for each indicator. New South Wales will continue to review and develop appropriate performance measures. To promote use, transparency and accountability the NSW Division of Local Government continues to make the publication and the raw data freely available and accessible via the internet.

Measures undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery In August 2011, the NSW Division of Local Government, in partnership with the Local Government and Shires Associations of NSW (now Local Government NSW) and Local Government Managers Australia (NSW), hosted Destination 2036, a landmark event in Dubbo which saw every one of the State’s 152 councils come together with State Government leaders to discuss challenges councils are facing and to develop solutions for creating a stronger local government system.

The event and further sector-wide consultation resulted in a Destination 2036 Action Plan, released in June 2012, with 34 actions under five key areas to achieve efficient and effective service delivery, quality governance, financial sustainability, appropriate structures in local government, and strong relationships between state and local government.

Destination 2036 also triggered an approach from the (then) Associations of NSW to the NSW State Government Minister for Local Government to appoint an Independent Local Government review Panel to drive key strategic directions identified through Destination 2036 and develop options to improve the strength of local government in NSW. The Panel was tasked with investigating and identifying options for governance models, structural arrangements and boundary changes for local government in NSW.

A further Destination 2036 action is the development of a consistent performance measurement framework for councils and a comprehensive programme to support improvement. The NSW Division of Local Government will work with the local government sector on this key initiative to drive improvement to the delivery of efficient and effective local government services.

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Improvements in local government service delivery to Aboriginal and Torres Strait Islander Communities From 2011-12, all 152 councils in NSW are required to prepare Integrated Planning and Reporting (IP&R) plans to facilitate community strategic planning and delivery of council services to best meet community needs.

The IP&R framework recognises that most communities share similar aspirations such as opportunities for social interaction, liveable places, opportunities for employment, reliable services and infrastructure and a sustainable environment. The difference lies in how each council and community responds to their own particular needs.

The IP&R framework allows councils and communities to respond flexibly to local need.

The IP&R guidelines include the requirement for a community strategic plan to be developed in consultation with groups within the local community and based on principles of social justice. These requirements include consideration to the needs of Aboriginal and Torres Strait Islander people within each local community.

The NSW Division of Local Government sought to renew the IP&R guidelines in 2012-13 to ensure the needs of the community, including Aboriginal and Torres Strait Islander communities, are being captured.

Report from the Victorian Department of Planning and Community Development

Methodology for distributing financial assistance grants for 2011-12, including any changes in methodology from 2010-11 The Victoria Grants Commission (Victoria Commission) allocates general purpose and local roads grants in accordance with the national principles formulated under the Local Government (Financial Assistance) Act 1995 (Cwlth).

General Purpose grants

For each council, a raw grant is obtained which is calculated by subtracting the council’s standardised revenue from its standardised expenditure.

The available general purpose grants pool is then allocated in proportion to each council’s raw grant, taking into account the requirement in the Commonwealth legislation and associated national distribution principles to provide a minimum grant to each council. As outlined below, increases and decreases in general purpose grant outcomes have been capped, which also affects the relationship between raw grants and actual grants.

Specific grants are allocated to a small number of councils each year in the form of natural disaster assistance. These grants are funded from the general purpose grants pool and so reduce the amount allocated on a formula basis. Details of natural disaster assistance grants allocated for 2011-12 are on page 85.

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Standardised expenditure

Under the Victoria Commission’s general purpose grants methodology, standardised expenditure is calculated for each council on the basis of nine expenditure functions. Between them, these expenditure functions include virtually all council recurrent expenditure.

The structure of the model ensures that the gross standardised expenditure for each function equals aggregate actual expenditure by councils, thus ensuring that the relative importance of each of the nine expenditure functions in the Victoria Commission’s model matches the pattern of actual council expenditure.

The total recurrent expenditure by Victorian councils in 2010-11 equalled $5.630 billion. Total gross standardised expenditure in the Victoria Commission’s allocation model for 2011-12 therefore also equals $5.630 billion, with each of the nine expenditure functions assuming the same share of both actual expenditure and standardised expenditure.

For each function, with the exception of Local Roads and Bridges, gross standardised expenditure is derived by multiplying the relevant unit of need (e.g. population) by:

â¢ the average Victorian council expenditure on that function, per unit of need;

â¢ a composite cost adjustor which takes account of factors that make service provision cost more or less for individual councils than the State average.

Major cost drivers (‘units of need’)

The major cost drivers and average expenditures per unit for each expenditure function, with the exception of Local Roads and Bridges, are summarised below:

Several different major cost drivers are used. These are viewed by the Victoria Commission as being the most significant determinant of a council’s expenditure need on a particular function.

For three expenditure functions (Governance, Environmental Protection Services and Business and Economic Services), an adjusted population is used as the major cost driver to recognise the fixed costs associated with certain functional areas.

The major cost drivers used in assessing relative expenditure needs for these functions take account of high rates of vacant dwellings at the time the census is taken. Councils with a

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vacancy rate above the State average are assumed to have a population higher than the census-based estimate. For the Governance function, councils with an actual population of less than 20 000 are deemed to have a population of 20 000. For the Environmental Protection Services function, councils with a population less than 15 000 are assumed to have a population double that amount, to a maximum of 15 000.

Cost adjustors

A number of cost adjustors are used in various combinations against each function. These allow the Victoria Commission to take account of the particular characteristics of individual councils which impact on the cost of service provision on a comparable basis. Each cost adjustor has been based around a State weighted average of 1.00 with a ratio of 1:2 between the minimum and maximum values, to ensure that the relative importance of each expenditure function in the model is maintained.

The 14 cost adjustors used in the calculation of the 2011-12 general purpose grants were:

â¢ aged pensioners â¢ population growth

â¢ english proficiency â¢ population less than 6 years

â¢ environmental risk â¢ regional significance

â¢ indigenous population â¢ remoteness

â¢ kerbed roads â¢ scale

â¢ population density â¢ socio-economic

â¢ population dispersion â¢ tourism

Because some factors represented by cost adjustors impact more on costs than others, different weightings have been used for the cost adjustors applied to each expenditure function.

There were no changes made to the cost adjustors for the 2011-12 allocation.

Net standardised expenditure

Net standardised expenditure has been derived for each function by subtracting standardised grant support (calculated on an average per unit basis) from gross standardised expenditure. This ensures that other grant support is treated on an ’inclusion’ basis.

Average grant revenue on a per unit basis (based on actual grants received by local government in 2010-11) is shown below:

Diagrammatically, the calculation of net standardised expenditure for each expenditure function is as follows:

Net Standardised Expenditure (for each function)

Standardised expenditure for the Local Roads and Bridges expenditure function within the general purpose grants model is now based on the grant outcomes for each council under the Victoria Commission’s local roads grants model. This incorporates a number of cost modifiers (similar to cost adjustors) to take account of differences between councils. Net standardised expenditure for this function for each council is calculated by subtracting other grant support (based on actual identified local roads grants and a proportion of Roads to Recovery grants) from gross standardised expenditure.

The total standardised expenditure for each council is the sum of the standardised expenditure calculated for each of the nine expenditure functions.

Standardised revenue

A council’s standardised revenue is intended to reflect its capacity to raise revenue from its community.

Relative capacity to raise rate revenue, or standardised rate revenue, is calculated for each council by multiplying its valuation base (on a capital improved value basis) by the average rate across all Victorian councils. The payments in lieu of rates received by some councils for major facilities such as power stations and airports have been added to their standardised revenue to ensure that all councils are treated on an equitable basis.

Rate revenue raising capacity is calculated separately for each of the three major property classes (residential, commercial/industrial/other and farm) using a three year average of valuation data.

Table B.3 Deriv ation of the average rates for each of the property classes

Category

3 Year Average Valuations $ billions

3 Year Average Rate Revenue $ billions

Average Rate $ billions

Residential $815.816 $2.379 $0.00292

Commercial/Industrial/Other $171.765 $0.611 $0.00356

Farm $68.974 $0.205 $0.00297

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As in recent years, the Victoria Commission has again constrained increases in each council’s assessed revenue capacity to improve stability in grant outcomes. The constraint for each council has been set at the statewide average increase in standardised revenue adjusted by the council’s own rate of population growth to reflect growth in the property base.

A council’s relative capacity to raise revenue from user fees and charges, or standardised fees and charges revenue, also forms part of the calculation of standardised revenue.

For each council and each of the nine functional areas, the relevant driver (such as population) is multiplied by the State median revenue from user fees and charges. For some functions, this is then modified by a series of ‘revenue adjustors’ to take account of differences between municipalities in their capacity to generate fees and charges, due to their characteristics.

The standard fees and charges used for each function (based on median actual revenues generated by local government in 2009-10) are shown below, along with the revenue adjustors applied.

The assessed capacity to generate user fees and charges for each council is added to its standardised rate revenue to produce total standardised revenue.

Bushfire Affected Councils

Following the February 2009 bushfires, the Victoria Commission made a special allowance in the 2009-10 general purpose grant allocations for the ten councils that had more than ten properties destroyed in those fires. An adjustment was made to the valuations for those councils used in assessing their rate revenue raising capacity, to reflect the sudden loss of rate income. A similar adjustment has been made to the grant calculation for those ten councils for the 2011-12 allocations.

The Victoria Commission continues to take account of the impact of the February 2009 bushfires on the revenue base for a number of Victorian councils, particularly for Murrindindi Shire.

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Appendix B

In 2010, following a significant reduction in Murrindindi Shire’s population (6.9 per cent), which would have ordinarily resulted in a grant decrease, the Victoria Commission recommended that the Council’s grant be maintained at the previous year’s level, plus the overall rate of growth in the funding pool (net of natural disaster grants).

The Victoria Commission recommended that this measure be continued for a further year, resulting in an increase in Murrindindi Shire Council’s grant of 4.6 per cent in 2011-12.

Minimum grants

The available general purpose grants pool for Victorian councils represents, on average, $66.80 per head of population (using Australian Bureau of Statistics population estimates as at 30 June 2010). The minimum grant national distribution principle requires that no council may receive a general purpose grant that is less than 30 per cent of the per capita average (or $20.04 for 2011-12).

Without the application of this principle, general purpose grants for 2011-12 for 13 councils - Bayside, Boroondara, Glen Eira, Hobsons Bay, Kingston, Manningham, Melbourne, Monash, Moonee Valley, Port Phillip, Stonnington, Whitehorse and Yarra, would have been below the $20.04 per capita level. The minimum grant principle has resulted in the general purpose grants to these councils being increased to that level.

Capping

The Victoria Commission limits downward movements in general purpose grants from year to year to 10 per cent. No council’s general purpose grant for 2011-12 will be less than the amount allocated for 2010-11.

The Victoria Commission also limits upwards movements in general purpose grant outcomes and caps such movements to 20% when compared with estimated entitlement for the previous year. This cap has been applied to one council (Queenscliffe) for the 2011-12 allocations.

Estimated entitlements 2011-12

A summary of the changes in estimated general purpose grant entitlements from 2010-11 to 2011-12 is shown below:

Table B.5 Change in es timated general purpose grant entitlements

Change in General Purpose Grant No. of Councils

Increase of more than 10.0% 7

Increase of 5.0% to 10.0% 9

Increase of up to 5.0% 63

No Change 0

Decrease 0

Total 79

Natural Disaster Assistance

The Victoria Commission provides funds from the general purpose grants pool to councils which have incurred expenditure resulting from natural disasters. Grants of up to $35 000 per council per eligible event are provided to assist with repairs and restoration work.

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27 grants to 22 councils have been allocated for 2011-12, totalling $876 098.

Table B.6 Grants t o Council's on natural disasters.

Council Natural Disaster Amount

Alpine Shire Council Flood $35 000

Ararat Rural City Council Flood $35 000

Baw Baw Shire Council Windstorm $21 188

Benalla Rural City Council Floods $70 000

Central Goldfields Shire Council Flood $35 000

Corangamite Shire Council Storm $35 000

Golden Plains Shire Council Flood $35 000

Greater Bendigo City Council Storm $35 000

Hepburn Shire Council Flood $35 000

Horsham Rural City Council Bushfire $34 320

Mitchell Shire Council Bushfire $35 000

Moira Shire Council Flood $22 965

Moorabool Shire Council Flood & Storm $70 000

Mornington Peninsula Shire Council Storms $68 426

Murrindindi Shire Council Storms $47 173

Pyrenees Shire Council Flood $35 000

Towong Shire Council Flood $35 000

Wangaratta Rural City Council Flood $35 000

Whittlesea City Council Bushfire $35 000

Wodonga City Council Windstorm $17 026

Yarra Ranges Shire Council Bushfire & Storm $70 000

Yarriambiack Shire Council Flood $35 000

Total $150 619

Local Roads Funding

The Victoria Commission’s formula for allocating local roads grants is based on each council’s road length (for all surface types) and traffic volumes, using average annual preservation costs for given traffic volume ranges. The methodology also includes a set of five cost modifiers for freight loading, climate, materials, sub-grade conditions and strategic routes and takes account of the deck area of bridges on local roads.

The formula is designed to reflect the relative needs of Victorian councils in relation to local roads funding consistent with the national principle relating to the allocation of local roads funding.

Traffic volume data

The allocation of local roads grants for 2011-12 was based on traffic volume data collected by all councils during the 12 months to June 2010. Councils were asked to categorise their local road networks according to nine broad traffic volume ranges - four for kerbed roads and five for unkerbed roads.

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Appendix B

Victorian councils reported a total of 129 723 kilome tres of local roads as at 30 June 2010, an increase of 521 kilometres or 0.4 per cent over the length reported 12 months earlier. Variations were as follows.

Table B.7 Change in length of local r oads

Change in Length of Local Roads No. of Councils

Increase of more than 5.0% 2

Increase of 1.0% to 5.0% 15

Increase of up to 1.0% 28

No change 27

Decrease of up to 1.0% 7

Decrease of 1.0% to 5.0% 0

Decrease of more than 5.0% 0

Total 79

Asset preservation costs

Average annual preservation costs for each traffic volume range are used in the allocation model to reflect the cost of local road maintenance and renewal.

The Victoria Commission has stated that the data on which the local roads methodology is based will be reviewed periodically to maintain its relevance. The most recent review was undertaken by ARRB Group in May 2009 has resulted in a revised set of asset preservation base costs being adopted for the 2009-10 allocations. These same asset preservation base costs were applied for the 2011-12 allocations.

Table B.8 Asse t reservation base cost

Road Type Daily Traffic Volume Range

Standard Annual Asset Preservation Cost $/km

Kerbed < 500 $3 600

500 - <1 000 $4 900

1 000 - <5 000 $6 600

5 000+ $10 700

Unkerbed Natural Surface $350

< 100 $2 500

100 - <500 $5 200

500 - <1000 $5 800

1 000+ $6 600

Bridges Concrete Deck $60 per sq metre

Timber Deck $100 per sq metre

Cost modifiers

The allocation model uses a series of five cost modifiers to reflect differences in circumstances between councils in relation to:

Cost modifiers are applied to the average annual preservation costs for each traffic volume range for each council to reflect the level of need of the council relative to others. Relatively high cost modifiers add to the network cost calculated for each council, and so increase its local roads grant outcome.

No changes were made to the cost modifiers for the 2011-12 allocation. As outlined in the 2010-11 report, the Victoria Commission is undertaking a review of the cost modifiers for its local roads allocation model. Work being undertaken currently includes a review of several of the Victoria Commission’s cost modifiers and a comparative investigation of local road lengths across the State. This work has not impacted on grant outcomes for 2011-12.

Grant calculation

The Victoria Commission calculates a total network cost for each council’s local road network. This represents the relative annual costs faced by the council in maintaining its local road and bridge networks, based on average annual preservation costs and taking account of local conditions, using cost modifiers.

The network cost is calculated using traffic volume data for each council, standard asset preservation costs for each traffic volume range and cost modifiers for freight generation, climate, materials availability, sub-grade conditions and strategic routes. The deck area of bridges on local roads is included in the network cost at a rate of $60 per square metre for concrete bridges and $100 per square metre for timber bridges.

Mathematically, the calculation of the network cost for a single traffic volume range for a council can be illustrated as follows:

The actual local roads grant is then determined by applying the available funds in proportion to each council’s calculated network cost.

Estimated entitlements 2011-12

Local roads grant outcomes for most councils have stabilised following the phased introduction of the ‘network cost’ allocation formula. In general, where a significant change has occurred in a council’s local roads grant for 2011-12, this is due to changed road length and traffic volume data supplied by the council to the Victoria Commission.

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Appendix B

A summary of the changes in estimated local roads grant entitlements from 2010-11 to 2011-12 is shown below.

Table B.9 Change in Local R oads Grants

Change in Local Roads Grant No. of Councils

Increase of more than 10.0% 1

Increase of 5.0% to 10.0% 15

Increase of up to 5.0% 63

Decrease 0

Total 79

Priorities for 2011-12

Stated priorities for 2011-12 were supporting councils to be more sustainable, resilient and responsive. This was done through:

â¢ Tomorrow’s Library, a comprehensive review of the role of Victorian public libraries including services and funding arrangements commenced.

Reforming council systems and processes - linking to National Reform Agenda:

â¢ rollout of the Local Government Reform Fund focussing on ‘Best Value’, procurement and internal audit. These projects focus on aligning capacity, strategy and sustainable outcomes for councils which compliment the nationally funded work

â¢ increase collaborative procurement opportunities between councils, business and the community.

Facilitate open and ongoing communication and partnerships between state and local government:

â¢ establish a Local Government Ministerial and Mayors Advisory Panel to provide high level advice on strategic and policy decisions

â¢ foster strong communications through a number of advisory groups and the Local Government Ministerial-Mayors Forum.

Developments in relation to local government’s use of long-term financial and asset management plans A continued emphasis on assisting councils to reform their business practices has taken place over the year.

Both council financial performance and asset management have improved considerably over the past decade. The Victorian Auditor-General audits each council’s financial statements each year. Since 2003-04, the Auditor-General has reported the following major trends. Seven years ago, Victorian councils were, on average, just breaking even on their operating result. Almost half of the councils had operating deficits. By 2011, 22 councils had underlying deficits, and the sector enjoyed an operating surplus of $1.03 billion. Within this significant improving

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trend, there was some deterioration since 2009, primarily due to the funding call on the local government defined benefit superannuation plan.

Local governments face challenges in managing their infrastructure. A number of programmes have been established to address this issue. They include the Regional Growth Fund under which local governments are eligible for grants funding through the $100 million Local Government Infrastructure Account. This funding supports a range of council initiatives including roads projects, bridges, new community assets such as sporting grounds and libraries, and upgrades of existing facilities. Forty rural councils are also able to apply for a share of $160 million of funding from a Country Roads and Bridges Fund over four years to ensure regional roads and bridges are renewed and maintained.

2011-12 saw Local Government Victoria (LGV) support the Municipal Association of Victoria (MAV) in the successful delivery of the Regional Asset Management Programme and the Local Government Sustainability Programme. Funded by the Australian Government these two important programmes were aimed at improving business practices and building local capacity.

The 2011-12 State Budget provided $17.2 million over four years to the Public Library Capital Works programme. Under the programme all councils and regional library services are eligible to apply for grants of up to $750 000 toward a new or refurbished library building or for a mobile library. 32 projects received funding in 2011-12, which comprised of 14 new or relocated libraries, 15 refurbished or extended libraries and three new or refurbished mobile library projects.

Measures undertaken to develop and implement comparative performance measures between local governing bodies The Local Government Reform Fund (LGRF) programme is a $1.5 million State Government investment in local government reform. The programme is designed to assist councils to improve their financial and resource management capabilities and business practices. Overseen by a local government steering committee made up of LGV representatives, council CEOs and peak and professional associations, the programme aims to demonstrate the cost savings and process improvements available to the sector through improved business practice.

The projects are designed to deliver a broad range of outcomes, including:

â¢ cost savings and process improvements that make a positive contribution to the financial viability of councils

â¢ alignment with local government better practices processes

â¢ investigation of alternate service delivery models and an improved understanding of the benefits of collaboration across Victorian local government

â¢ delivery of lessons learnt to the State government and the sector- informing future policy making and planning

â¢ capacity building (people and resources) particularly in regional and rural Victoria councils.

Each project has identified challenges inherent within the existing legislative framework. This information is being used to inform the role of LGV in leading reform and will support future reviews of legislation, standards or guidance documents.

These projects focused on aligning capacity, strategy and sustainable outcomes complimented the nationally funded work. The programme provided for the practical application and

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implementation of reform tools in areas such as best value, procurement and internal audit. Thirty four councils were directly involved in the programme, the results and learning of which will be shared across the sector. Work also commenced on a programme to promote better integration between asset management and financial planning.

For example, as part of the Procurement in Practice stream, five councils in the Central Highlands region undertook a collaborative procurement of their bituminous resealing service. By joining forces and using their collective purchasing power the five participating councils were able to drive down the costs of procurement and make considerable savings, with an annual savings of $630 000 whe n compared to current contract prices.

Bushfire and flood response

Through LGV, Department of Planning and Community Development delivered a range of programmes in 2011-12 that supported councils in responding to natural disasters. These included:

â¢ the Bushfires Municipal Emergency Resourcing Program, which deploys additional emergency management capacity to councils in conjunction with the Municipal Association of Victoria

â¢ the Community Assistance Gift Program, which administers payments to councils made through the Victorian Bushfire Appeal Fund;

â¢ the Murrindindi Assistance Package, which assists Murrindindi Shire Council in rebuilding its capacity following the Black Saturday bushfires

â¢ the Building Permit Fees Reimbursement Program, which reimburses building permit fees paid by property owners affected by the February 2009 bushfires

â¢ the $5 million Local Government Clean Up Fund, which provides assistance to councils affected by the floods in early 2011.

Legislative Reform

In September 2011, legislation passed in the Victorian Parliament bringing forward the date for local government general elections from November to October every four years. This will enable more time for councillors to begin work on their four year council plans and annual budgets.

In February 2012, legislation passed in the Victorian Parliament providing the residents and ratepayers of the City of Greater Geelong the opportunity to directly elect their Mayor. In addition, legislation passed in the Victorian Parliament to provide for the Melbourne City Council’s electoral structure to be reviewed independently by the Victorian Electoral Commission, similar to all other councils.

Tomorrow’s Library

Tomorrow's Library is a landmark, two year review of Victorian public libraries being conducted by the Ministerial Advisory Council on Public Libraries. It is an opportunity for Victorian communities to shape the future of Victorian public libraries.

The Tomorrow’s Library review is considering the relevant future services, directions and trends that will lead to changes in the provision and delivery of library services, such as emerging technologies, e-books, telephony, internet, partnership arrangements and the increasing role of libraries as community spaces and changing community needs. This review is also comparing the services provided in Victoria and other jurisdictions, as well as the funding of public libraries.

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Initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities There are a number of initiatives between local government and Aboriginal communities throughout Victoria. There is considerable sector-wide interest in developing stronger links with the Aboriginal community. Local Government Professionals established an Indigenous Special Interest Group.

The Victorian government is funding an Aboriginal employment broker housed in the Municipal Association of Victoria to assist local councils with employment and economic development initiatives. There have been strong partnerships with local government to deliver placed based initiatives, such as the establishment of Bubup Wilam (an early learning centre specialising in Aboriginal culture and identity) with Whittlesea City Council. Local Indigenous Networks are also working in partnership with local government with positive results, such as the establishment of the Bendigo Indigenous Homework Centre.

The State Government has also funded Reconciliation Victoria to undertake the Reconciliation in Local Government Victoria project.

In June 2011, the Minister for Local Government and Aboriginal Affairs announced the establishment of the Local Government Aboriginal Partnership Project.

The Local Government - Aboriginal Partnership Project is working to ensure:

â¢ there are effective partnerships between Aboriginal Victorians and local government

â¢ more Aboriginal people are employed in local government

â¢ local government purchase goods and services from Aboriginal businesses

â¢ Aboriginal people and businesses are a valued part of the local and regional economy

â¢ local governments take pride in local Aboriginal culture and heritage and support the special place Traditional Owners hold in their community and in caring for country

â¢ local governments actively support reconciliation

â¢ local governments' planning, policy and programmes reflect the needs and aspirations of Aboriginal communities

â¢ Aboriginal people feel comfortable and welcome using council services

â¢ the three levels of government strengthen co-ordination around Aboriginal outcomes.

The Project has brought together a partnership of Aboriginal people, the Municipal Association of Victoria, the Victorian Local Governance Association, Local Government Professionals, Reconciliation Victoria and all three levels of government. A steering committee is leading and shaping the project.

Report from the Municipal Association of Victoria The Municipal Association of Victoria (MAV) welcomes the opportunity to provide a submission to the 2011-12 National Report. This submission addresses initiatives undertaken in 2011-12 in which local government in Victoria have: â¢ improved the efficiency or effectiveness of their services delivered â¢ development and implementation of comparative performance measures for councils â¢ developments in the use of long-term financial and asset management planning by the

sector.

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Measures undertaken to improve the efficiency and effectiveness of local government service delivery

Food safety

Significant reform has been achieved in Victoria’s food safety regulatory framework. Local government, through their environmental health units, are responsible for managing and enforcing food safety regulation in Victoria. With many businesses operating across municipal boundaries (either large business/chain restaurants or mobile food businesses), the regulatory framework was failing to keep pace with an evolving and swiftly changing industry.

The MAV managed the development of a single registration system for temporary and mobile food businesses. The system simplifies the registration process and gives councils access to performance histories of businesses across the state, helping them streamline inspection regimes. This increases the efficiency and effectiveness of the food regulatory regime for both councils as the enforcement agency and the food industry.

Over 2011-12, the MAV continued to partner with the Department of Health to implement reforms that will make it easier for businesses to comply with food safety regulation. The MAV facilitated the input of local government data in the inaugural Department of Health food safety report and ensured councils’ role in food safety regulation was effectively promoted.

MAV Procurement

Significant reform to the procurement practices of local government was delivered in 2011-12. The MAV has now established and has been successfully operating a sector-wide procurement unit to deliver benefits to the sector through economies of scale. MAV Procurement delivered twelve tenders this year which achieved significant value and efficiency gains to all 78 member councils involved. Collaborative tenders covered a broad scope of materials and deliverables including building and construction equipment, public maintenance vehicles, IT and administration systems, and work wear.

Through the National Procurement Network, MAV Procurement established strong links with other state and territory local government association procurement divisions. This relationship realised some outstanding savings for Victorian councils by aggregating council requirements nationally, particularly in the fleet and heavy equipment areas. Tender/procurement areas included:

â¢ electricity for contestable sites, green power and street lighting

â¢ microsoft whole of local government software licensing

â¢ incident management system

â¢ corporate wardrobe

â¢ small plant and machinery

â¢ road and bridge making equipment

â¢ earth moving and material handling equipment

â¢ workwear and personal protective apparel

â¢ park and playground equipment

â¢ IT policy system

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â¢ gas and buildings and facilities

â¢ bill payment services.

Sector-wide procurement capabilities continue to be advanced by MAV Procurement. Working with a consultant, we developed a best practice contract management guide and training programme for councils to implement better and more consistent contract management processes. A Doing business with local government guide was produced to educate contractors and encourage potential suppliers to form profitable, long-term partnerships with councils. MAV Procurement implemented innovative procurement systems to deliver a robust and efficient process for suppliers and councils. A Vendor Panel quotation management system ensured a fair and competitive process and increased the usage of preferred suppliers. It also provided unprecedented transparency and governance over the procurement process.

Following the success of a single electoral services tender in 2008, another tender was conducted for the provision of electoral services for the October 2012 local government elections. The MAV provided a standard suite of documentation including specifications of core and additional electoral services, required tenders, and contract terms and conditions. The 54 participating councils were provided with an evaluation and assisted to finalise the contract with the preferred service provider.

Land use planning

Councils in the MAV’s STEP planning process improvement programme (STEP Planning) delivered significant improvements to permit assessment. Consistency of timeframes increased and the time required to process straightforward applications reduced by 30 to 50 per cent, also reducing application backlogs. The 2012 annual forum enabled STEP Planning councils to share their improvement ideas with the sector. As participation increased, the MAV reviewed delivery options and went to the market to improve member value. STEP Planning data supported many MAV submissions including two Productivity Commission reviews into performance benchmarking of planning systems and local government as a regulator.

Performance benchmarking

The Victorian Government has been working towards the development of a suite of performance benchmarks for local government. The MAV and local government have been cooperatively involved in the development of these measures. The MAV’s position has been that performance benchmarks need to focus on the services and functions that are common to all councils or their cohorts and any measures need to have a clear conceptual link to the overall objective of that service area.

The project has been progressing well and it is expected that further information will be provided on this matter to the 2012-13 National Report.

Developments in relation to local government's use of long-term financial and asset management plans

Finance and asset management planning

Ongoing collection and analysis of sector financial data continued to fortify the case for financial assistance reforms for rural councils facing significant sustainability challenges. Steady improvement in financial strength was recorded for almost all councils, with ongoing assistance

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from the MAV’s asset management and other continuous improvement programmes. Detailed costing studies were undertaken for maternal and child health services, carbon tax impacts, public library funding and home and community care. These studies provided critical input to secure better funding outcomes for the sector in negotiations with governments as well ensuring that councils have good comparative data on their financial and asset management performance.

The MAV’s STEP Asset management programme has continued, with the emphasis now on ensuring that the link between asset management systems and financial management systems is strong. Strengthening this link ensures financial management reflects the true asset condition of the organisation and ensure that future financial strategies are developed to accurately reflect target asset levels.

Report from Queensland Department of Local Government

Methodology for distributing financial assistance grants for 2011-12, including any changes in methodology from 2010-11

Identified road component

This component of the Financial Assistance Grant is allocated as far as practicable on the basis of relative need of each local government for roads expenditure and to preserve its road assets.

In the opinion of the Queensland Local Government Grants Commission (Queensland Commission), a formula based on road length and population best meets this National Principle for Queensland. This formula is:

â¢ 62.85 per cent of the pool is allocated according to road length

â¢ 37.15 per cent of the pool is allocated according to population.

General purpose component

The General Purpose Grant (GPG) was reviewed in the years prior to 2011-12, when it was first implemented. The new methodology complies with the National Principles but has been simplified for transparency purposes.

As before, every local governing body in the State is entitled to a minimum grant under the National Principles. This minimum grant is equivalent to 30 per cent of the GPG pool distributed on a per capita basis. In 2011-12 this amount equated to $20.07 per capita. The remaining 70 per cent of the GPG pool is distributed according to relative need, according to the National Principles.

To determine relative need, the new methodology derives averages for revenue raising and expenditure on service provision to be applied to all local governments within the State.

After application of these averages, the Queensland Commission uses various cost adjustors which allow for factors outside a council’s control which affect its ability to raise revenue or provide services, again in keeping with the National Principles.

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Local Government National Report 2011-12

Assessing revenue

In the process of the review, the Commission has decided to keep the existing revenue categories of:

â¢ rates;

â¢ garbage charges;

â¢ fees and charges

â¢ other grants and subsidies.

However, the rating assessment was changed from the pre-existing differential formula (i.e. different categories of land were assessed on a different basis to one another) to a more uniform, simple formula. The Queensland Commission has adopted a ten year averaging of property valuations to minimise the effects of large fluctuations and to better accommodate the government’s valuation cycle. The total State rate revenue is divided by the total State land valuation to derive a cent in the dollar average, which is then multiplied by each council’s total land valuation, as follows:

State total rate revenue = Cent in the dollar average

x

Council total valuation (ten year average) State total valuation (ten year average)

This is then adjusted to allow for a council’s capacity to raise rates, using an ABS product, Socio-Economic Indexes for Areas. The new methodology uses three of the indexes:

- Because Indigenous councils do not charge rates, 20 per cent of their State Government Financial Aid allocation is used as a proxy for rate revenue

- Note that the assessment of rate revenue was previously capped for annual variations, both increases and decreases. The Queensland Commission decided to remove this capping

- Fees and charges are averaged on a per capita basis

- Garbage revenue is averaged on the basis of the number of bins serviced for each local governing body

- In accordance with the National Principle for Other Grant Support, grants relevant to the expenditure categories considered by the Queensland Commission are included as revenue according to the actual amounts received by council. Three grants are included by the Queensland Local Government Grants Commission, as follows:

- Identified Road Grant (50 per cent)

- State Government Financial Aid (Indigenous councils only - 20 per cent)

- Minimum General Purpose Grant (100 per cent).

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Table B.10 R evenue assessment model

Revenue category Revenue driver(s) Unit of measure (State average)

Rates Total valuations Average cent in dollar rates: $0.01028

Garbage charges Number of bins serviced $236 per bin serviced

Fees and charges Population $244 per capita

Other grants Actual grants received Identified Road Grant (50 per cent used) State Government Financial Aid (20 per cent used) Minimum grant component of the General Purpose Grant (100 per cent used)

Assessing expenditure

In revising the methodology with regards to the expenditure assessment, the Queensland Commission includes nine service categories:

â¢ administration

â¢ public order and safety

â¢ education, health, welfare and housing

â¢ garbage and recycling

â¢ community amenities, recreation, culture and libraries

â¢ building control and town planning

â¢ business and industry development

â¢ roads

â¢ environment.

The Queensland Commission considers which of the revised suite of cost adjustors are applied to which service categories. Table B.11 outlines the expenditure categories, the units of measure and the cost adjustors applied in assessing the cost of service provision.

Community amenities, recreation, culture and libraries $180.55 per capita

ï¼ ï¼ ï¼ ï¼ ï¼

Building control and town planning $194.15 per residential property / $54.18 per capita (Indigenous councils)

ï¼ ï¼

Business and industry development

$35.89 per capita

ï¼ ï¼

Roads Road expenditure assessment (see

below)

ï¼ ï¼

Environment $44.09 per residential property/

$14.48 per capita (Indigenous councils) ï¼ ï¼

Roads

The Queensland Commission, in conducting the methodology review, decided to keep the existing road assessment model, an asset preservation model, estimating the cost to maintain a council’s road network, including bridges and hydraulics. Table B.12 provides the dollar values allocated on the basis of traffic volumes and the cost adjustors applied.

Note that the assessment of road expenditure was previously capped for annual variations, both increases and decreases. The Queensland Commission decided to remove this capping.

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Table B.12 R oad expenditure assessment model

Traffic volume range (adjusted vehicles per day) Base cost

($/km)

Cost adjustors (%)

Climate Soil sub-grade

Locality on-cost Terrain

Favourable (TI -50)

Adverse (TI +100)

Good

(CBR>10)

Poor

(CBR<5)

MR

Reactive

<1.0p/km^2

<0.1p/km^2

Undulating

Hilly

Mountainous

Rural Roads

Unformed $250 - 25 - - - 5 10 2 5 -

<40 $500 - 20 - - - 5 10 2 5 -

40-150 $2 300 - 20 - 10 10 5 10 2 5 -

150-250 $4 650 -10 15 -5 10 10 2.5 5 2 5 10

250-1 000 $6 600 -7.5 10 -5 10 10 2.5 2.5 2 5 10

1 000-3 000 $8 100 -7.5 10 -5 10 10 2.5 2.5 2 5 10

>3000 $11 000 -7.5 10 -5 10 10 2.5 2.5 2 5 10

Urban Roads

<500 $8 500 -7.5 10 -2.5 5 5 2.5 2.5 - 2 5

500-1 000 $15 500 -7.5 10 -2.5 5 5 2.5 2.5 - 2 5

1 000-5 000 $25 400 -7.5 10 -5 10 10 2.5 2.5 - 2 5

5 000-10 000 $41 800 -7.5 10 -5 10 10 2.5 2.5 - 2 5

>10 000 $66 700 -7.5 10 -5 10 10 2.5 2.5 - 2 5

Allowances are given for heavy vehicles and for the provision and barging of plant and material to islands, which increase the traffic volumes, increasing a council road expenditure amount. These are outlined in Table B.13.

Table B.13 Allo wances given for heavy vehicles

Light to medium trucks, 2 axles = 1 vehicle

Heavy rigid and/or twin steer tandem = 2 vehicles

Semi trailers = 3 vehicles

B Doubles = 4 vehicles

Road trains = 5 vehicles

Cost adjustors

Cost adjustors are indices applied to expenditure categories to account for factors outside a council’s control, that impact the cost of providing services to its community. The Queensland Commission decided to review the existing cost adjustors. The following were deemed to represent such cost increases and are based on more reliable data than previous cost adjustors:

â¢ location - represents the additional costs in the provision of services related to the council location and is based on the Accessibility/Remoteness Index for Areas

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â¢ scale - recognises economies of scale. In order to make this cost adjustor reflective of movements in population, the new calculation involves a sliding scale from 1 to 2 based on the annual average population

â¢ demography - represents the additional use of facilities and increased service requirements due to the composition of the population according to age and Indigenous descent. These are calculated on a sliding scale from 1 to 2 reflecting the proportion of Indigenous, aged and young residents.

Table B.11 above identifies which cost adjustors are applied to the service categories.

Scaling back

The scaling back that occurs within the previous methodology was based on the two weighting processes of proportional and equalisation, with a 25 per cent weighting given to the proportional method and 75 per cent weighting given to the equalisation method. Under the proportional method, each council’s funding is reduced by the same proportion. Under the equalisation method, the GPG is allocated so that assessed revenue together with the grant equals the same proportion of assessed expenditure for all deficit councils.

In the new methodology, the Queensland Commission has moved to an equal weighting of proportional and equalisation—50 per cent to proportional and 50 per cent to equalisation.

Application of the Amalgamation Principle

The Queensland Commission ensured that the Amalgamation Principle was applied i.e. no amalgamated council from March 2008 dropped below its pre-amalgamation grant levels. Additionally an increase cap of 15 per cent and a decrease cap of 10 per cent was applied to councils, except councils which were found to have material errors in their road data, as confirmed with independent road auditors.

Application of the Minimum Grant Principle

The Queensland Commission determined, on the basis of the methodology, that the following councils were to receive a minimum grant component of the GPG only:

â¢ Brisbane City Council

â¢ Gold Coast City Council

â¢ Ipswich City Council

â¢ Redland City Council

â¢ Moreton Bay Regional Council

â¢ Sunshine Coast Regional Council.

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Appendix B

Developments in relation to local government’s use of long-term financial and asset management plans, including any developments in implementing the Local Government Financial Sustainability Nationally Consistent Frameworks To progress the national local government sustainability agenda, the Department of Local Government in Queensland implemented the sustainability and reporting process that emphasises sustainable communities and sustainable local governments.

At this time, the sustainability and reporting process applies on a voluntary basis to all 73 Queensland local governments.

The process establishes a consistent reporting framework to evaluate the sustainability of local governments and the local government system using four components: asset management, community engagement, governance and financial management (sustainability).

In 2011-12, 59 of the 73 local governments submitted data to the Department of Local Government in Queensland for the Financial Management (Sustainability) (FMS) evaluation. This evaluates whether a council has a clear and coherent long-term financial management (sustainability) strategy in place, which is defined as the ability to maintain financial and infrastructure capital over the long-term.

The responses from local governments are subject to a review, but are not subject to audit.

Of the 59 respondent local governments:

â¢ 14 have a clear and coherent financial management strategy in place (26 of 56 in 2010-11)

â¢ 21 have a sound financial management strategy in place (16 of 56 in 2010-11)

â¢ 11 have provided insufficient information for the Department of Local Government in Queensland to form a view and are lacking financial management strategies.

For the first time, the Department of Local Government in Queensland also carried out analyses based on size and scaling by applying the Australian Classification of Local Governments (ACLG) categories and grouping the ACLG categories on two bases:

â¢ invest significantly in renewing infrastructure initially, before a sharp decline to at or near recommended levels.

In Queensland, the Local Government Act 2009 (Qld) and the Local Government (Finance, Plans and Reporting) Regulation 2010 require local governments to prepare long term asset management plans and long-term financial forecasts.

Measures undertaken to develop and implement comparative performance measures between local governing bodies The provision of information by the Queensland Government to the community through the Queensland Local Government Comparative Information Report continued in 2011-12. This report assists local governments in their endeavours to develop new and more effective ways to deliver their services by providing an effective tool by which they can monitor trends over time and benchmark services performance both internally and with other councils.

The Local Government (Finance, Plans and Reporting) Regulation 2010 (Qld) included the relevant measures of financial sustainability. These are also included in the City of Brisbane (Finance, Plans and Reporting) Regulation 2010 (Qld). The measures are to be used to evaluate the financial sustainability of local governments in Queensland.

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Measures undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery There were no significant reforms or initiatives during the 2011-12 financial year. Major amendments to Queensland local government legislation will be undertaken in the 2012-13 financial year.

Improvements in local government service delivery to Aboriginal and Torres Strait Islander Communities There were no significant initiatives undertaken during the 2011-12 financial year in relation to local government service delivery to Aboriginal and Torres Strait Islander communities.

However, the Queensland Government continued to provide funding to Indigenous local governments to support them in their provision of local government services to their communities. In 2011-12, $33.482 million was granted to 16 Indigenous councils under the State Government Financial Aid programme provided, in lieu of rates, to assist those councils in meeting the costs incurred for the provision of core municipal and community services. These services included, for example, public order and safety, solid waste management, street lighting, community amenities, community and town planning, urban storm water management, roads, environment and transport, and water and sewerage.

Other funding provided by the Queensland Government to Indigenous councils in 2011-12 included $3.525 million under the Revenue Replacement Program, an initiative under the State’s alcohol-related harm reduction strategy for nine Indigenous local governments whose council-held canteen licence lapsed by 31 December 2009. Funding was provided under this programme to assist councils maintain community services previously funded by the profits from alcohol sales.

The State also continued its commitment to provide funding to all Indigenous councils, except the Torres Strait Island Regional Council, under the Indigenous Economic Development Grant programme. It aimed to support councils to maintain adequate staffing levels to deliver municipal services efficiently. Each council received $80 000 t o support 1.6 full time equivalent positions, except for Yarrabah, Palm Island and Northern Peninsula Area Regional Councils which each received $160 000 t o support 3.2 full time equivalent positions.

Report from Local Government Association of Queensland

Breadth of Local Government During 2011-12, the Local Government Association of Queensland (LGAQ) provided comments and submissions to the Federal Government and State Government on a variety of policy platforms, strongly advocating for appropriate consideration of both local government and community interests. The breadth of local government involvement is here demonstrated, as these submissions ranged from responding to the Access and Equity Inquiry undertaken by the Federal Department of Immigration and Citizenship, through to climate change adaptation, Queensland’s urban water services, the Industrial Relations (Fair Work Act Harmonisation) and Other Legislation Amendment Bill 2012, floodplain management, Resources Legislation (Balance, Certainty, Efficiency) Bill 2011, pest management, trunk infrastructure and the State Planning Policy, amongst others.

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Local Government National Report 2011-12

Indeed, Queensland local governments, similar to other state and territory councils, are no longer involved in the simple trilogy of 'roads, rates and rubbish'. Not only do Queensland local governments own and manage approximately 80 per cent of Queensland’s road network, and maintain streets, pavements, traffic lights, bridges and car parks, but councils are also involved in diverse services such as, but by no means limited to:

â¢ stormwater and draining systems

â¢ providing water supply and wastewater treatment facilities

â¢ recycling and household waste services

â¢ building standards, including inspection, licensing, certification and enforcement

â¢ strategic planning and development assessment

â¢ community housing

â¢ climate change adaptation and mitigation measures

â¢ local environment conservation initiatives, energy and water saving programmes

â¢ emergency management as part of community recovery and resilience before, during and after natural disasters

Council internal operational efficiencies are driven by several factors, including:

â¢ workforce size, employment conditions and efficiencies

â¢ breadth of operational activity and performance

â¢ cost of operations (including procurement practices)

â¢ audit and management skills as related to cost control

â¢ risk management systems and experience

â¢ utilisation of technology

â¢ business models.

Queensland local governments currently participate in large scale shared service arrangements primarily set up by LGAQ as subsidiary companies. Independent analysis has confirmed that councils that participate with LGAQ’s subsidiary businesses save $100 million per annum (as a conservative figure).

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Appendix B

LGM Queensland

The Queensland Local Government Mutual Liability Pool (LGM Queensland) is a legal liability self insurance scheme that is owned and operated for the sole benefit of Queensland councils and local government controlled entities. It provides a range of covers, including public liability, professional indemnity, Councillors and officers’ liability, employment practices liability and cover provided to casual hirers of council facilities. This scheme has grown in importance since the significant public liability law reforms of 2002 and 2003, and during 2011-12, was invaluable in insulating Queensland local governments from the ongoing insurance cost impacts of local and overseas natural disasters. Data shows that increasing numbers of very large liability claims are being pursued against councils, particularly as procedural failures in areas such as maintenance, roadworks safety and development approvals can leave councils and LGM Queensland exposed to significant liability costs.

LGM Queensland has expanded its range of risk management resources in specific operational areas in 2011-12, such as footpath management, contractual indemnities and labour hire arrangements. These resources are supported by Regional Risk Coordinators and the RiskeMap risk management software. Both these support services are jointly funded with Local Government Workcare, and demonstrate the benefits of the two local government self-insurance schemes working together.

Local Government Workcare

Local Government Workcare (LGW) is a joint undertaking by Queensland councils and council controlled entities to hold a workers compensation self-insurance scheme. Scheme members are provided with full workers compensation cover, proactive claims management, injury management and injury prevention services. LGW has continued to work with councils on improving workplace health and safety management through use of the Safe Plan system, with an updated version of Safe Plan being released to maintain consistency with Queensland’s nationally harmonised work, health and safety legislation.

In mid-2010, the LGAQ partnered with Health Link Consultants and HCF to launch the Queensland Local Government Health Plan to provide an additional affordable workplace benefit specific to local governments and support efforts to identify councils as attractive employers. The Plan is open to council employees and elected members.

Local Government Infrastructure Services Pty Ltd

Operational since 2005, Local Government Infrastructure Services Pty Ltd (LGIS) is a hugely successful joint initiative of Queensland Treasury Corporation and LGAQ. The primary objective is to support local government with a range of infrastructure consultancy and procurement services across water, waste, roads, demand management, disaster management and infrastructure recovery. During 2011-12, LGIS continued to provide advisory and project management services to both State and local governments, and in particular developed practical training assistance in relation to compliance and reporting obligations under the National Greenhouse and Energy Reporting Regulations 2008 and the Clean Energy Act 2011 (Cwlth).

During 2011-12, LGIS also continued to provide a number of services to assist local governments impacted by the natural disasters that occurred in Queensland over the 2010 and 2011 period. In particular, LGIS assisted 12 councils to assess and document over $750 million

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Local Government National Report 2011-12

worth of damage caused by these flood and cyclone events; completing the recovery task has been a massive undertaking for councils, the Queensland Reconstruction Authority and LGIS.

LGIS also managed the State Government’s ClimateSmart Home Service (CSHS), and the project was wound down in August 2012, a few months ahead of its scheduled closure. The total number of services delivered for this programme was 344 371. During 2011-12, CSHS was recognised with the receipt of a number of State and National Awards - the Tools of Change Landmark Award 2011, the IPAA Public Sector Excellence Awards 2011, and both the 2012 Queensland and National iAwards for green IT and sustainability, and was a finalist in the Premier’s Awards for Excellence in Public Service Delivery (Green Category) 2011.

In addition to these specifics, LGIS delivers individual advisory assignments to councils, including business case development, financial analysis and procurement support.

Local Buy

Queensland councils have continued to utilise Local Buy procurement services since 2001, when it was established to aggregate the buying power of local government, shorten procurement timeframes and streamline the interaction of business and local government. Councils that use Local Buy contracts can purchase a large range of goods and services up to any value without the time consuming and administrative burden of following the Local Government Act 2009 (Qld) requirements for seeking tenders and quotes. During 2011-12, Local Buy had 40 contracted arrangements in place, including telecommunications, engineering consultancy and Microsoft software licensing, as well as a number of additional contracts for flood damage relief.

Other services that Local Buy has delivered during 2011-12 included:

â¢ the purchase of an electronic quotation system called vendor-panel, in conjunction with similar organisations in the other states

â¢ a review of electricity tariff arrangements for several councils, generating considerable savings on these councils’ energy costs

â¢ continued provision of LG Tender Box, an electronic tendering solution which provides a simple and effective tender management process for councils

â¢ assistance for numerous councils in probity and tendering services

â¢ the creation of a new contract management arrangement for project management, which can provide significant savings for council project work.

GovCloud

In September 2011, LGAQ and Pacific Technology Group Pty Ltd created GovCloud to provide leading cloud based solutions and services to assist local governments, agencies and utilities by sharing common cloud resources instead of purchasing physical IT software and hardware. For councils that utilise this service, it has reduced costs as GovCloud services include scalable capacity, computing backup and storage, hosted email and document management, and disaster management and business continuity.

Propel Partnerships

Propel was created in 2006 as a joint venture between LGAQ and Aegis Services Australia (with LGAQ holding a controlling stake) to assist local governments in discovering and delivering

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Appendix B

efficiencies across administrative functions, such as call centre design and implementation, shared administrative services (either as individual councils or on a regional basis) and customer service enhancement.

A major highlight of 2011-12 was the presentation of a tangible financial efficiency dividend to Ipswich City Council, in excess of $500 000. Ipswich City Council has agreed to a 10 year arrangement between Propel and Ipswich to deliver a centralised customer contact centre that manages all customer services, property rates, rates arrears, multiple licensing functions, box office services and other various payment services.

Resolute Information Technology Pty Ltd

Resolute is an information technology business that worked with the majority of Queensland councils in 2011-12 to deliver web hosting and management services, provided consulting and managed services in the private and not-for-profit sector, and partnered with the recently developed GovCloud. In 2011-12, Resolute also signed a Partnering Agreement with Kana Corporation to offer councils a citizen centric customer relationship management solution that is scalable and affordable, so councils are no longer restricted to a choice between marginal 2nd tier products and high-end ICT platforms that are too large and/or expensive for the majority of Queensland councils to purchase.

Efficiency Performance Scan

Through several indepth interview and analysis projects over the past couple of years, the LGAQ has identified an increasing need among Queensland councils to address council performance. This includes:

â¢ discovery of local efficiencies to drive cost savings

â¢ assistance with local compliance with standards and legislation

â¢ identification and local comparison with industry benchmarks

â¢ community perceptions of councils’ financial management and performance.

Accordingly, in early 2012 LGAQ developed a comprehensive diagnostic tool and consulting advisory service to Queensland local governments called the Efficiency Performance Scan. The scan metrics are in the following categories:

â¢ financial and asset management

â¢ governance processes

â¢ workforces strategy and planning

â¢ community engagement

â¢ service delivery models and outcomes

â¢ council systems that promote ongoing efficiencies and improvements.

This service offering was initially piloted with two regional Queensland councils, and one additional council employed this service during 2011-12. Since this time, the Efficiency Performance Scan has become an important means by which councils can be provided with a detailed measurement of performance and targeted advice to achieve efficiencies and continuous improvement.

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Local Government National Report 2011-12

LGAQ also provides Queensland local governments with a large suite of online resources to enable best practice templates and resources, and reduce duplication and unnecessary work in formulating and updating these resources. They include:

â¢ delegations register

â¢ HR advance

â¢ guidelines for Councillor Conduct, Contact with Developers, contact with officers, use of confidential information and other important governance issues

â¢ online commentary on core local government legislation relating to Queensland.

Total Solutions

Total Solutions is LGAQ’s professional consultancy service which delivers a wide range of products, services and projects designed to assist Queensland local governments improve their operations or in situations where they may not currently have available capacity or resources. They are usually provided to councils on a fee for service basis or as a commercial business offering, and comprise the following:

â¢ training - LGAQ is a Registered Training Organisation which provides accredited courses, non-accredited courses, short courses and online training, continually tailoring offerings to adapt to changing responsibilities for council CEOs and managers, as well as offering formal recognised qualifications (such as the Diploma of Project Management and the Diploma of Local Government) and specific consultancy services or training requirements for councils on an individual or regional basis. At the end of the 2011-12 financial year, over 1 430 local government graduates have received a formal qualification from LGAQ, and over 2 600 individuals attend LGAQ courses annually.

LGAQ is in a unique position to intimately understand the needs of its members, Queensland councils, and continually adapts and improves these service offerings for councils in order to keep them relevant in an ever-changing legislative environment, provide best practice examples and templates, and assist in performance to improve the efficiency and effectiveness of Queensland local governments and service delivery to their communities.

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Appendix B

Queensland local governments are increasingly coordinating initiatives and receiving funding from the Federal Government, which has been found to coincide with an overall reduction in funding from the Queensland State Government. As such, Financial Assistance Grants (FAGs) are a very important source of funding for councils - FAGs funding to local government across Australia between 1974-75 to 2011-12 inclusive have totalled over $37 billion.

In its Vision 2020 Project, released in May 2009 and looking at the future needs of the Queensland resources industry, the Minerals Council of Australia identified significant gaps in infrastructure that, unless closed, would help produce a lack of connectivity of export supply chains and inadequate road and air transport and telecommunications infrastructure. Such factors, the Minerals Council of Australia argued, would restrict mining activity and negatively impact on economic benefits.

In most resource regions in Queensland, the cost to councils of the capital and recurrent spending to provide for resource industries far outstrips resources-related revenue. The adoption of horizontal fiscal equalisation principles for inter-state distribution of FAGs would more accurately reflect the need for financial assistance across the states and territories and provide a consistent basis for the distribution of Australian Government general revenue sharing arrangements.

Advancing Asset Management in Local Government (Qld) Project

Nationally, local governments control and maintain $300 billion worth of non-financial assets as at June 2011, a 95 per cent increase over the previous decade; Queensland councils own approximately $83 billion. Each year, it is estimated that Queensland local governments spend approximately $15 million on dedicated asset management initiatives.

In part to address this need for appropriate tools to manage these assets, the Australian Government has provided $2.695 million to Queensland local governments from the Local Government Reform Fund through the Advancing Asset Management in Local Government (Qld) Project. Combined funding from the Australian Government, Queensland councils, the Local Government Association of Queensland (LGAQ) and the Queensland State Government amount to approximately $3.2 million. The outputs of the project were intended to meet the Australian Government’s two main objectives (ie integration and collaboration) and improve the capability of Queensland’s local governments in managing their assets and providing better outcomes for local communities through effective management of assets, financial planning processes, and anticipating infrastructure needs.

The project’s implementation plan involved a programme of activities to upgrade the asset management capabilities of a total of 61 Queensland councils - 44 non-Indigenous local governments and 17 Indigenous local governments (including Torres Shire Council). There are 12 Queensland local governments that do not receive Local Government Reform Fund (LGRF) funding under the project.

The project, which was delivered by LGAQ in partnership with the Queensland State Government, promoted and accelerated the implementation of integrated asset and financial management systems through developing core asset management plans for key infrastructure assets. The project outcomes include:

â¢ measurement of the current asset management capability against the National Asset Management Assessment Framework (NAMAF)

â¢ development of asset management plans for all infrastructure asset classes

â¢ incorporation of whole of life costing, community planning processes and asset management planning into budgeting processes

â¢ further development of the asset management planning skills of councillors and officers

â¢ provision for specific activities, including the development 10-year financial plans for Indigenous local governments.

The project has been recognised as both a success and a very good example across Australia under the national LGRF programme, and in April 2012, Orion Consulting Network analysed and produced the Project Evaluation Final Report, stating that “this project has made good progress towards achieving its objectives". In June 2012, the Australian Government approved the project’s Final Report.

In addition to all of the project milestones having been completed, other activities that have been initiated included:

For the majority of the councils, the work undertaken on this project has exceeded the items contained in the project’s implementation plan. Whilst project funds are available, the LGAQ will continue to facilitate regional asset management meetings to promote ongoing management for financial sustainability and completing outstanding days allocated under the project allocation days.

Local Government Cost Index

Each year, the LGAQ publishes a Queensland Local Government Cost Index, which gives an independent analysis of price movements for Queensland local governments.

Between 2006 and 2010, there was an average annual increase in the Local Government Cost Index of 4.2 per cent, and in early 2011, the potential cost pressures from the flood and cyclone damage influenced a prediction of subsequent rate increases of up to 7.5 per cent if there was a consequent rapid increase in civil construction costs.

However, Australian Bureau of Statistics (ABS) data for 2011 released in April 2012 indicated no substantial increase in construction costs, and therefore the 2011-12 general rate increase across Queensland was relatively modest compared with previous financial years. Total general rate revenue on a per capita basis increased by 3.5 per cent in 2011-12, compared with 6.3 per cent in the 2010-11 financial year.

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Appendix B

The table below provides details of the price movements from 2005-06 to 2010-11 for a number of relevant price indices.

The next table below provides details of the five year moving averages of percentage changes in each of the above indices, along with the calculation of the Local Government Cost Index for 2012.

Table B.16 Fi ve year moving averages of percentage changes

Index

Five Year Average Increase 2006-07 to 2010-11

CPI - Brisbane 3.2%

Road Freight - Australia 3.9%

Wage Price - Queensland 3.9%

Road and Bridge Construction - Queensland 4.0%

Local Government Cost Index (50% CPI + 50% Road & Bridge) 3.6%

The Local Government Cost Index 2012 change is +3.6 per cent, calculated from a 50 per cent weighted, Five year moving average of changes in the CPI for Brisbane and the Road and Bridge Construction Cost Index for Queensland.

Based on average price movements over the past five years, an average rate increase across the state of +3.6 per cent on a per capita basis was predicted for 2012-13 in order to maintain the current level of service. This prediction assumed other revenue sources (eg grants) increase in line with costs.

The Local Government Cost Index only provides an aggregated picture of cost movements at the state level; the mix of construction and non-construction activity varies from council to council and there are parts of the state where construction costs have been increasing faster than the state average. Such factors will all be of relevance at the local level when determining the level of rate increase necessary to provide the desired level of service. LGAQ believes that local governments should be commended for striving to set the increase of council rates as low as possible in order to alleviate cost of living pressures on ratepayers.

HR Advance

In 2010, in partnership with a private provider, LGAQ developed the HR Advance tool, an online suite of documents such as contracts, policies and employee correspondence that complies

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with legislation and best practice principles. By the end of the 2011-12 financial year, almost all Queensland local governments have subscribed to this service, enabling many efficiencies not only within individual councils but across the Queensland local government sector. Other benefits include:

â¢ resources to assist local governments in developing the necessary suite of human resource, workplace health and safety, and other miscellaneous policies

â¢ increased capacity of council staff in the administration and application of these policies and procedures

During 2011, recognising the need for an efficient, relevant and affordable workforce operating in a contemporary and challenging economic environment, LGAQ with the support of councils embarked upon a project to introduce a regime of comprehensive workforce planning which would assist councils at the local level as well the industry at the regional and state level. At the outset, 19 Queensland councils collaborated with LGAQ on a project entitled HR Metrics, aiming to identify and agree on a common set of workforce data metrics (in excess of 80 measurements within 12 categories) that can be applied across the local government sector. This data allows councils to measure their workforce productivity and will be used to enable councils to benchmark their data against other similar councils as well as at the collective state level. As workforce issues are one of local government’s bigger expenses, this data will be invaluable for each council in order for them to understand, analyse and track trends and improve their performance.

The data gathered by this project, as well as the LGAQ’s annual workforce census, also underpins the common workforce planning approach currently being piloted in excess of 20 councils. Complementing this strategy has been the support and contribution of Queensland local government to the development of the 2013 National Local Government Workforce Strategy, which has been developed under the auspices of the Australian Centre for Excellence in Local Government (ACELG).

Community Wellbeing Indicators

In early 2011, the LGAQ launched its two year Community Wellbeing Indicators Project. This Project was aimed at supporting councils in developing better ways to:

In late 2011, the LGAQ completed a comprehensive community wellbeing pilot survey in five local government areas that represented a cross-section of local government in Queensland - Sunshine Coast, Isaac, Gladstone, Longreach and Wujal Wujal councils. This pilot survey trialled

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a limited set of wellbeing indicators based on community perceptions, and demonstrated the usefulness of such an approach to local government.

The majority of Queensland councils have developed a long-term community plan that represents the community’s views, visions and values, and how the community aspires to reach its full potential in the future. This project aims to enhance local government’s ability to measure the value of their investment in their communities across social, cultural, economic, environmental and democratic activities through a standardised community survey. This tool would allow them to:

â¢ measure community wellbeing using a number of standard indicators

â¢ track changes over time in community wellbeing

â¢ benchmark their performance against results from similar councils across the state

â¢ identify policy measures that can improve community outcomes.

At the conclusion of the 2011-12 financial year, the LGAQ partnered with ACELG to build on this initial work. This research will demonstrate how a community wellbeing indicators survey may be adapted for use by all local governments and be used to measure, analyse and assess the progress of community wellbeing in a local government area.

The LGAQ is excited to provide more information on the successful outcomes of this project in due course, as the final report and tool has recently been released by LGAQ and ACELG.

Queensland Water Regional Alliance Program

In late 2011, LGAQ secured Queensland State Government funding to undertake a local government and water industry led initiative to investigate a range of matters, including possible alternative institutional models for urban water service provision outside of South East Queensland.

The resulting project, the Queensland Water Regional Alliance Program, invited expressions of interest from three regional groupings of councils to participate in the programme, with the following objectives:

â¢ to better respond to the significant social, environmental and economic policy drivers impacting urban water provision in remote and regional communities

â¢ identification of institutional arrangements, taking into account the diversity of Queensland communities, that will best secure urban water services while ensuring safety and supply reliability as well as political accountability

â¢ capacity to provide for ongoing training, skills enhancement and development needs of staff.

The three regional groupings of councils (based around Longreach, Cairns and Bundaberg) established technical and elected member working groups, with a total of 12 different councils participating in the programme overall. These three pilots have recently finalised their reports, and LGAQ and qldwater have analysed these outcomes. The LGAQ is very pleased to briefly report that the project has been so successful with these pilots that the Queensland State Government has granted an additional $250 000 to extend the programme to additional groupings of councils over a three year period.

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The LGAQ and qldwater are excited to have developed this project, in conjunction with the Queensland State Government, to successfully pilot collaborative, efficient, shared service arrangements with these three groupings of 12 councils for the provision of urban water outside South East Queensland. The LGAQ looks forward to providing a more detailed analysis of the pilot reports, in addition to the extended programme, at a later stage.

Urban Water Services Project Memorandum of Agreement

Following the Queensland State election in March 2011, the newly-elected Newman Government recognised the need to renew the Urban Water Services Project Memorandum of Agreement (MoA), that had been signed in June 2010, as well as commit to updating this MoA at some point in 2012-13.

The Urban Water Services MoA promotes a collaborative partnership approach between governments (both state and local) and industry to tackle common challenges, with a focus on:

â¢ transparent and streamlined regulations and reporting regime, which results in better decision making at a local, regional and state level

â¢ improved transparency of pricing structures, adequate investment in infrastructure and sustainable institutional arrangements for service providers that support the long term sustainability of their water assets and infrastructure

â¢ promotion of skills development and careers pathway, which results in improved attraction and retention of skills within the water industry

â¢ opportunities for the local government water sector to consider efficient and innovative service delivery models, while continuing to own and manage these assets and provide acceptable levels of service to all local communities.

The LGAQ believes that this collaborative approach at a state, local and industry level that encourages and emphasises efficient and innovative frameworks and models for service delivery, including regional partnerships or shared service arrangements, should be replicated and tailored to other sectors where local government and communities have a vital interest.

Level Crossing Interface Agreements

An Interface Agreement for level crossings is a requirement under the Transport (Rail Safety) Act 2010 (Qld). Council, as the responsible road manager for locally controlled roads, is required to enter into an Interface Agreement with the rail infrastructure manager to manage the safety risks at level crossings. This legislative requirement came into effect from 1 September 2012 and applies to 46 Queensland councils.

LGAQ engaged with rail infrastructure authorities (Queensland Rail and QR National) during 2011-12 to facilitate, on behalf of Queensland local governments, the establishment of these Interface Agreements. Further, in order to assist councils with their legislative obligations, LGAQ worked with the State Department of Transport and Main Roads and Queensland Rail to develop guidance materials and an Interface Agreement template. This also ensured standardisation across the affected council areas and provided councils with a template with which to begin negotiations.

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Roads Alliance

The Roads Alliance, a partnership between the Queensland State Government, LGAQ and local governments, celebrated its 10 year anniversary in 2012. This is an outstanding achievement and demonstrates its value as well as continued political investment and support from both sides of state politics. To coincide with this anniversary, the Roads Alliance Board commissioned a formal review of the Roads Alliance, focusing on its operational framework, strengths, weaknesses and opportunities for the future. The review exercise was conducted by consultants de Chastel & Associates, and completed in October 2012.

Following the turmoil created by natural disasters during 2011, the Roads Alliance during the 2011-12 financial year focused on consolidating gains in programme delivery, asset management and road safety. Key highlights included:

â¢ over half a million dollars of state-wide Capability Development Funding being quarantined specifically for bridge asset management initiatives

â¢ the establishment of the Cape York Regional Transport Group, incorporating many of the Aboriginal and Torres Strait Islander councils on the Cape

â¢ the establishment of the Roads Alliance Road Asset Valuation Project, which allows local governments to duplicate the road asset valuation methodology used by the State Department of Transport and Main Roads, and will provide councils with a consistent state-wide methodology and standardise reporting requirements.

Regional Development Australia

LGAQ has long advocated for closer engagement with the Regional Development Australia (RDA) framework since the inception of the Queensland RDA Network in March 2010.

Despite representations, arrangements for RDA implementation were sealed with a bilateral agreement between only the Federal and Queensland State Government. If the RDA framework is to continue, the LGAQ believes that the most effective model involves a tripartite agreement, reflective of the arrangement achieved in South Australia.

Queensland operates under a complex array of regional organisations, many of which with substantial financial investment from participating councils. A survey of Queensland councils and RDAs commissioned by LGAQ in November 2011 found that 59 per cent of respondents believed there was scope for the relationship between local government and RDAs to grow. Specific roles identified include the ability to jointly identify regionally significant infrastructure and funding assistance, improved communication into the regional planning process, opportunities to partner in investment, and the provision of targeted business support and planning.

The LGAQ believes that effective engagement and improved recognition of local government as a key partner in the RDA Committee Network is vital to ensure the ongoing success of this (or similar) framework/s. The LGAQ remains keen to enhance relationships between the three levels of government and recognise local governments’ contribution to regional development.

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Indigenous Leaders Forum

As indicated in previous National Local Government reports, the LGAQ regularly meets with mayors, councillors and senior council officers of the Queensland Aboriginal and Torres Strait Islander councils.

Arising out of a comprehensive member and stakeholder review conducted by LGAQ over several years, the LGAQ established a Forum specifically for all Queensland Indigenous councils entitled the Indigenous Leaders Forum (ILF). Convened to allow Indigenous councils the opportunity to come together, discuss common challenges and concerns, and to put forward issues to be addressed, the ILF was also designed to leverage the collective will and effort of participating councils in order to maximise the benefits for councils and provide a focus for identifying opportunities for collaboration amongst Indigenous councils.

The inaugural Forum was held on the Gold Coast, 3-5 October 2011. Membership is comprised of the Mayor and Chief Executive Officer from the following 17 Indigenous councils (including Torres Shire Council):

â¢ Aurukun Shire Council

â¢ Cherbourg Aboriginal Shire Council

â¢ Doomadgee Aboriginal Shire Council

â¢ Hope Vale Aboriginal Shire Council

â¢ Kowanyama Aboriginal Shire Council

â¢ Lockhart River Aboriginal Shire Council

â¢ Mapoon Aboriginal Shire Council

â¢ Mornington Island Aboriginal Shire Council

â¢ Napranum Aboriginal Shire Council

â¢ Northern Peninsula Area Regional Council

â¢ Palm Island Aboriginal Shire Council

â¢ Pormparaau Aboriginal Shire Council

â¢ Torres Shire Council

â¢ Torres Strait Island Regional Council

â¢ Woorabinda Aboriginal Shire Council

â¢ Wujal Wujal Aboriginal Shire Council

â¢ Yarrabah Aboriginal Shire Council.

The inaugural Forum was a success, and a commitment was given to hold the ILF bi-annually. Outcomes included an agreed list of priorities for LGAQ and Indigenous councils to focus on, including:

â¢ sustainability, particularly in the areas of financial and asset management, budgeting and planning

â¢ community safety and justice

â¢ opportunities for shared services

â¢ economic development.

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The ILF has continued to meet bi-annually, with the Forum held 23-24 May 2012 in Cairns attracting 67 participants, with representatives from all of the 16 Queensland Indigenous councils. State and Federal Ministers regularly attend the Forum to converse with the delegates on various matters raised by the Forum.

The ILF has continued to be a successful and valuable forum for Indigenous councils to meet with each other, LGAQ and State Government Ministers and representatives, to discuss common issues and potential solutions, and to continue to build good working relationships with each other. Members have collaborated and put forward recommendations as the ILF in conjunction with LGAQ to the Queensland State Government on a number of issues.

Aboriginal and Torres Strait Islander councils continue to show great progress in their development as Local Government Authorities and as the leading 'voice of and for their communities' following their transition from Community Councils with their own legislation to Local Government Authorities covered under the same Local Government Act as all other Queensland local governments.

LGAQ Tool - Indigenous Planning Schemes

Prior to the implementation of the Local Government Act 2009 (Qld), Aboriginal and Torres Strait Islander communities were not regulated to perform planning and development related functions. The Local Government Act 2009 (Qld) created a situation that requires all local governments, including Aboriginal and Torres Strait Islander councils, to prepare a planning scheme and implement development assessment policies.

Arising out of this need to assist Indigenous councils, in 2010, LGAQ engaged consultants Arup to undertake extensive consultation and develop a tool to assist in the preparation of planning schemes, particularly as these councils are characterised by remote locations, small communities with little or no rate base and limited resources, yet they deliver a wide variety of services to their communities. Primary findings arising out of this consultation include:

â¢ Indigenous councils generally do not undertake planning nor allocate resources - most planning work required is undertaken by consultants on an as needs basis;

â¢ identified barriers to implementing planning schemes included:

- general lack of technical knowledge

- lack of funding to employ a town planner or engage consultants

- insufficient volume of work to employ a full or part time planner

- lack of internal processes and record keeping processes to manage development applications

- potential lack of support after the planning scheme is adopted and Queensland State Government training has been completed

â¢ the identified training needs included:

- general training about the Sustainable Planning Act 2009 (Qld) (SPA), including council responsibilities particularly in relation to the development assessment process

- training on how to use the planning scheme

- GIS training.

Other identified issues included the complex interrelationship between various relevant legislation (such as Leases, Native Title Act, Aboriginal Land Act and SPA), tenure resolution,

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unreliability of Census data in Indigenous communities, need for greater regional collaboration, unreliability of funding and the need to better plan for the future.

To respond to these issues and provide specifically targeted information to Indigenous councils, LGAQ and Arup developed and produced the 'Preparing a Planning Scheme: A guide for Aboriginal and Torres Strait Islander Councils' in 2011. This guide clearly identified local government responsibilities in planning and development, demonstrated the benefits of a planning scheme, and provided a 'step by step' outline and other practical tools to help integrate a planning scheme with other Indigenous Council business. The guide was warmly welcomed by Indigenous councils.

Queensland Community Satisfaction Tracking Study 2011

Finally, the LGAQ commissions an independent survey every couple of years to gauge their opinion on various aspects of local government activity. Market Facts conducted the Community Tracking Survey in 2011 and interviewed more than 700 participants through focus groups in metropolitan, provincial and rural locations. The input provided by residents, community leaders and stakeholders during these interviews defined those parameters which the community considers to be important when assessing the relevance of local government to them. These included:

â¢ community lifestyle services - such as parks, playgrounds, public amenities, environmental controls, conservation, heritage protection, sporting and recreational facilities, libraries, community safety and services, animal control, shopping centres and community development

â¢ managing the shire/city - such as town planning, building control, economic development, local employment, tourism, financial management and revenue raising

â¢ customer services/communication - such as information services, informing and consulting the community, responding to the community, and providing leadership and advocacy

â¢ qualities of Council - such as the elected council as a whole, councillor(s) dealt with, officers, outdoor workers and indoor staff

While this survey in 2011 found that Queensland councils achieved an overall performance rating of 65 per cent (down from 67 per cent in 2009 and more than 70 per cent in 2007), the LGAQ believes that this result is admirable considering the forced 2008 amalgamations and skyrocketing costs that have helped harden community attitudes to local councils. However, the survey also found an overwhelming majority of respondents (more than 70 per cent) perceived councils to be performing well in providing services such as libraries and sport and recreation facilities. In addition, 73 per cent thought that their council rates and charges were good or reasonable value for money, up from 66 per cent just two years ago, and an excellent result considering the current financially constrained times.

Summary

During the 2011-12 financial year, LGAQ and Queensland local governments have continued to employ innovative solutions to help deliver essential services to their communities and perform efficiently and effectively. With the incredible breadth of services that local government

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now provide, encompassing far more than the traditional focus on essential infrastructure and municipal services, it is imperative that local government improves its financial sustainability to be less dependent on grants and political will.

LGAQ and its subsidiaries continue to support Queensland local governments in adapting to increasing community expectations, with greater involvement in the delivery of a variety of services, while improving and achieving internal council efficiencies.

Report from the Department of Local Government and Communities in Western Australia

The methodology used for distributing local government Financial Assistance Grants for 2011-12, including any changes in methodology from 2010-11 The Western Australian Local Government Grants Commission (WALGGC) uses the balanced budget method for allocating General Purpose Grants and an Asset Preservation Model for allocating the Identified Local Road Grant component.

The ‘balanced budget’ approach to horizontal equalisation applies to all 138 local governments in Western Australia and is based on the formula:

Calculation of assessed revenue capacity is based on standardised mathematical formulae, and involves assessing the revenue-raising capacity of each local government in the categories of:

â¢ residential and commercial/industrial rates

â¢ agricultural rates

â¢ pastoral rates

â¢ mining rates

â¢ recreation and culture charges

â¢ building charges

â¢ investment earnings

â¢ other revenue.

Assessed expenditure need is based on standardised mathematical formulae, involving the assessment of each local government’s operating expenditures in the provision of core services and facilities under the ‘standard’ categories of:

â¢ governance

â¢ law, order and public safety

â¢ education, health and welfare

â¢ community amenities

â¢ recreation and culture

â¢ building control

â¢ transport.

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For the 2011-12 grant determinations, 31 local governments received the minimum grant entitlement. Local governments that received a minimum grant in 2011-12 had their grant calculated on a per capita basis, in accordance with the minimum grant principle established under the Local Government (Financial Assistance) Act 1995 (Cwlth).

The WALGGC was still in the process of completing its review of the General Purpose Grant methodology and, as such, the General Purpose Grants for 2011-12 were pegged at 2010-11 levels, with an escalation factor applied, equivalent to the percentage increase in the total Western Australia pool, after deducting the minimum grant local governments.

For the 2011-12 grant determinations, the WALGGC used the latest Australian Bureau of Statistics’ estimated residential population data.

Methodology Review

The methodology review was completed in December 2011 and will be applied to the 2012-13 grant determinations. The WALGGC will reduce the number of disabilities it currently applies to determinations. The balanced budget approach will be retained, albeit with some changes to the overall application of disabilities.

Local Road Grant Funding

Under the current principles, seven per cent of the Australian Government funds provided for local roads are allocated for special projects (one-third for roads servicing remote Indigenous communities and two-thirds for bridges). The remaining 93 per cent is distributed in accordance with road preservation needs, as determined by the WALGGC’s Asset Preservation Model (APM). The model assesses the average annual costs of maintaining each local government’s road network and has the capacity to equalise road standards through the application of minimum standards. These standards help local governments that have not been able to develop their road systems to the same standard as more affluent local governments.

The road data used for the APM is obtained from Main Roads WA and is of a consistently high standard.

For the 2011-12 determinations, the average increase in Local Road Grants for all local governments was 4.59 per cent. A total of 127 local governments received an increase of less than 10 per cent, while five local governments received an increase of more than 10 per cent. Seven local governments had a decrease in their Local Road Grants.

In 2011-12, the Local Road allocations were:

Table B.17 Lo cal road allocations

Roads Servicing Remote Indigenous Communities $ 2,353,473

Bridges $ 4,706,945

Distributed according to the Asset Preservation Model $94,075,845

Total $101,136,263

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Special Projects - Roads Servicing Remote Indigenous Communities

In 2011-12, the special projects funds for Indigenous access roads were:

Table B.18 Sp ecial project funds for Indigenous access roads

Australian Government funds from WALGGC $2,353,473

State funds from Main Roads WA $1,176,736

Total $3,530,209

The Indigenous Roads Committee advises the WALGGC on procedures for determining the allocations of Australian Government road funds for roads servicing remote Indigenous communities, and recommends the allocations that are made each year.

Membership of the Indigenous Roads Committee comprises one representative from:

â¢ WALGGC

â¢ Western Australian Local Government Association (WALGA)

â¢ Main Roads WA

â¢ Department of Indigenous Affairs

â¢ Department of Families, Housing, Community Services and Indigenous Affairs

â¢ Department of Local Government and Communities.

The Indigenous Roads Committee has established funding criteria based on factors including the number of Indigenous people serviced by a road, the distance of a community from a sealed road and the proportion of traffic servicing remote Indigenous communities. These criteria provide an effective method of assessing priorities in developing a five-year programme.

Special Projects - Bridges

The WALGGC’s policy for allocating funds for bridges is influenced by the fact that there are many local government bridges that are in poor condition, and that the preservation of these bridges must be given a high priority.

The Special Project funds for bridges are allocated only to preservation type projects, recognising that some of these projects may include some upgrading, and that preservation includes replacement when the existing bridge has reached the end of its economic life.

Main Roads WA contributes one third of the cost of all projects funded under the Special Projects programme. In 2011-12, the funds for the preservation of bridges were:

Table B.19 F unds for the preservation of bridges

Special Project funds from WALGGC $4,706,945

State funds from Main Roads WA $2,353,472

Total $7,060,417

A Bridge Committee advises the WALGGC on priorities for allocating funds for bridges. Membership of the Bridge Committee comprises representatives of:

â¢ WALGGC

â¢ WALGA

â¢ Main Roads WA.

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The Bridge Committee received recommendations from Main Roads WA on the priorities of projects under consideration. Main Roads WA has an ongoing programme of inspecting and evaluating the condition of local government bridges and has the expertise to assess priorities and make recommendations on remedial measures. As part of the process, local governments make applications to the WALGGC for bridge funding each year.

Development in local government use of long-term financial and asset management plans The former Department of Local Government in Western Australia continued to support the implementation of the Integrated Planning and Reporting (IPR) Framework and Guidelines. These include a wide range of resources that provide for the development of key strategic management and planning tools informing core local government functions, including long-term financial and asset management planning.

In addition, grant funding was provided to those local governments participating in structural reform within the state to assist in the development of Strategic Community Plans, Long Term Financial Plans and Asset Management Plans.

In 2011-12, local government responses to a survey relating to local government capability indicated that:

â¢ 83 per cent of local governments met the baseline level for Financial Planning

â¢ 30 per cent of local governments met the baseline level for Asset Management.

In August 2011, the WA Government enacted regulations under the Plan for the Future provisions of the Local Government Act 1995 (WA), which will require all Western Australia local governments to develop Strategic Community Plans and Corporate Business Plans that are informed by Long Term Financial Plans and Asset Management Plans. The Department of Local Government in Western Australia also published an Advisory Standard outlining minimum standards for integrated planning performance. The Advisory Standard and related Guidelines align these activities with the Local Government Financial Sustainability Nationally Consistent Frameworks.

The Department of Local Government in Western Australia continued to conduct the series of two-day Master Classes relating to Integrated Planning, Asset Management Planning and Long Term Financial Planning. These were delivered across the state to local government executives and officers in partnership with Local Government Managers Australia WA Division (LGMA).

The Department of Local Government in Western Australia also commenced a series of workshops relating to Integrated Planning, Asset Management Planning and Long Term Financial Planning, in partnership with WALGA. These were delivered across the state to local government councillors.

Measures undertaken to develop and implement comparative performance measures between local governing bodies In 2011-12, the Department of Local Government in Western Australia continued its implementation of the Performance Measurement Framework for local governments. The Framework set the direction and intent of the Department of Local Government in Western Australia’s approach to measuring local government reform and capacity building against the requirements set out in the Integrated Planning and Reporting (IPR) Framework.

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The framework was designed to:

â¢ help individual local governments monitor and manage their own progress delivering community services

â¢ provide information to direct the Western Australia State Government capability activities

â¢ identify the changes arising from capacity building reforms.

2011-12 was the second occasion the Department of Local Government in Western Australia measured the sector’s performance in relation to Strategic Community Planning, Workforce Planning, Financial Planning and Asset Management as an aggregated Capability Index.

The Capability Index provides a measure that shows the proportion of local governments attaining a baseline level of capability. As anticipated, although improvement was seen from the previous year, many local governments did not undertake adequate planning and just four per cent of local governments across Western Australia met all four capability elements. This finding has informed the Department of Local Government in Western Australia’s subsequent capacity building work programme.

Reforms undertaken to improve the efficiency and effectiveness of local government service delivery During 2011-12, there were 64 local governments supporting the Western Australian State Government’s structural reform initiatives. These local governments were either progressing amalgamations, engaged in Regional Transition Groups to assess the benefits of amalgamations, engaged in Regional Collaborative Groups to identify opportunities for sharing services, or supportive of structural reform but not able to form a group with neighbouring local governments.

Sixteen local governments have formed five Regional Transition Groups and 21 local governments representing the remote regions of the state are working together as four Regional Collaborative Groups.

Two Regional Transition Groups comprising five local governments completed the business planning process and resolved not to progress amalgamation within their respective groupings. A further proposed amalgamation between two local governments was defeated by an elector’s poll.

The four Regional Collaborative Groups have identified a range of collaborative initiatives in areas such as regional waste management, town planning, human resources, Integrated Planning and Reporting, Information Technology and better practice processes. Two groups comprising seven local governments have completed the business planning process and commenced implementation.

The creation of the City of Greater Geraldton on 1 July 2011 resulted from the amalgamation of the City of Geraldton-Greenough and Shire of Mullewa. Benefits being realised by the community include:

â¢ increased resources to support liaison with Aboriginal communities

â¢ Mullewa youth programme expanded

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â¢ enhanced regional advocacy through Regional Cities Alliance

â¢ Australian Government funding accessed for community infrastructure

In June 2011, the Western Australia Government appointed an independent Metropolitan Local Government Review Panel to examine the social, economic and environmental challenges facing Perth in the next 50 years.

The Panel was asked to recommend governance models and boundaries for local governments in the Perth metropolitan area that take account of those challenges. The Panel consulted widely with stakeholders and community representatives.

It considered almost 450 submissions received in response to an issues paper and draft findings. The Panel was due to submit its final report to the Minister in July 2012.

Initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities The Department of Local Government in Western Australia continued to progress arrangements during 2011-12 towards the development of a proposal for local government delivery of municipal services in Aboriginal communities across remote Western Australia as part of the Local Government Services in Aboriginal Communities Project, in accord with commitments in the National Partnership Agreement on Remote Indigenous Housing (2009). The State and Australian Governments agreed to work together towards developing new arrangements, including clearer roles and responsibilities and funding for municipal services in Aboriginal communities.

The Western Australian Government, through its Royalties for Regions programme, made financial assistance available to 22 local governments in remote and regional Western Australia to undertake a scoping and costing study of local governments delivering municipal services in Aboriginal communities. This study commenced in 2010-11 and was finalised in November 2011. The study examined the asset and operational requirements for local governments to deliver a suite of municipal services in Aboriginal communities.

Progress during the year included:

â¢ the completion of five scoping and costing studies covering Aboriginal communities in:

- the Shire of Broome

- the Kimberley region

- the Pilbara region

- the Gascoyne and Mid-West regions

- the Goldfields region

â¢ the development and sector endorsement of a set of Transition Planning Principles that would guide the implementation phase of the project

â¢ the finalisation of Western Australia’s comments on the Draft National Report on the National Audit of Municipal and Essential Services

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â¢ development of a sector position on the future of municipal service delivery in Aboriginal communities, by the Western Australian Local Government Association and presented as a Communique to the State Government in March 2012

â¢ the Department of Local Government in Western Australia’s development of a service delivery planning approach in May 2012 to assist local governments to continue to develop individual proposals for their municipal service delivery responsibilities. Local governments were invited to participate in a trial of the approach, that would examine the current service delivery arrangements in communities, how local governments may be able to interact with these arrangements and determine costs of delivery. The service delivery planning approach would be tried in the following financial year.

The Department of Local Government in Western Australia maintained specialist staff in policy and project management to support this project.

Report from the Western Australian Local Government Association

The methodology used for distributing local government Financial Assistance Grants for 2011-12, including any changes in methodology from 2010-11 The distribution of Financial Assistance Grants (FAGs) in 2011-12 was very similar to the distribution in 2010-11. There were no changes to the WALGGC’s methodology for distributing the roads component of FAGs.

The method of allocating the General Purpose Grant (GPG) component was reviewed in 2011-12. Changes resulting from this review will be introduced for the 2012-13 financial year. Because of the impending review, the WALGGC made some interim arrangements for the 2011-12 allocation. Minimum grant councils in 2011-12 had their allocation determined according to the usual methodology, i.e. in accordance with the minimum grant Principle outlined in the Local Government (Financial Assistance) Act 1995 (Cwlth). All other Councils had their GPG pegged to 2010-11 levels with an escalation factor (4.965 per cent) applied. The Western Australian Local Government Association (WALGA) considers that the WALGGC’s interim arrangements were appropriate for 2011-12 while the methodology review was being conducted.

Developments in Local Government’s use of long-term financial and asset management plans (particularly the Local Government Financial Sustainability Nationally Consistent Frameworks) Working towards the implementation of Integrated Planning and Reporting was a key focus for WA’s Local Government sector during 2011-12. The WALGA worked with the Department of Local Government in Western Australia, Local Government Managers Australia (WA) and officer representatives from local governments to prepare the sector for the changes, through activities such as master classes and workshops. In preparing the Local Governments for this change, the WALGA found that WA was able to benefit from the earlier experience of other states in implementing their own Integrated Planning and Reporting Guidelines.

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Measures undertaken to develop and implement comparative performance measures between local governing bodies The sector’s main focus in 2011-12 was working towards the implementation of Integrated Planning and Reporting in July 2013. As a result there was little activity undertaken on comparative performance measures. Nonetheless, some local governments worked with the Department of Local Government in Western Australia to assess their own performance against the future requirements of the Integrated Planning and Reporting framework. As the reforms are bedded down and local governments in Western Australia gain further experience with the integrated frameworks, comparative performance measures will be developed (these are likely to be developed from 2014-15 onwards).

Reforms undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery General reforms undertaken in 2011-12 to improve the efficiency and effectiveness of service delivery focused on the integration of local government’s asset management, financial management and workforce management responsibilities with Strategic Community Plans.

Another major reform activity for the sector in 2011-12 was the ‘Metropolitan Local Government Review’, which was announced by the then Minister for Local Government, Hon G M (John) Castrilli MLA in June 2011. During 2011-12, the WALGA consulted extensively with local governments in Western Australia to inform its submission in response to the review’s Issues Paper and then another submission in response to the Review Panel’s draft findings. The WALGA also noted the findings and implications of the Review Panel’s ‘Financial Position Review’ released in May 2012.

Initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities The Council of Australian Governments’ (COAG) National Aboriginal Reform Agreement provides the current framework for the Australian, state and territory governments to work together with Aboriginal Australians and the broader community to achieve the target of ‘Closing the Gap’ in Aboriginal disadvantage. The key objective, from a local government perspective, is the progressive transfer of responsibility of municipal and essential services to the states (and thereby, local governments) by 1 July 2013, as outlined in the National Partnership Agreement on Remote Aboriginal Housing (2009). Twenty two local governments are affected in Western Australia.

The WALGA has also worked closely with the Department of Local Government in Western Australian on scoping and costing the potential requirements of local governments taking responsibility for service delivery. This project commenced in 2010.

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Report from the South Australian Local Government Grants Commission, the Local Government Association of South Australia and the Department of Planning, Transport and Infrastructure

The methodology used for distributing local government financial assistance grants for 2011-12 including any changes in methodology from 2010-11

General Purpose Grant

The methodology used to assess the general-purpose component of the Local Government Financial Assistance Grants is intended to achieve an allocation of grants to local governing bodies in the state consistent with the National Principles. The over-riding principle is one of Horizontal Fiscal Equalisation, which is constrained by a requirement that each local governing body must receive a minimum entitlement per head of population as prescribed in the Commonwealth legislation.

The South Australian Local Government Grants Commission (South Australian Commission) uses a direct assessment approach to the calculations. This involves the separate estimation of a component revenue grant and a component expenditure grant for each council, which are aggregated to determine each council’s overall equalisation need.

Available funds are distributed in accordance with the relativities established through this process and adjustments are made as necessary to ensure the per capita minimum entitlement is met for each council. For local governing bodies outside the incorporated areas (the Outback Areas Community Development Trust and five Aboriginal Communities) allocations are made on a per capita basis.

A standard formula is used as a basis for both the revenue and expenditure component grants.

Formulae

General financial assistance

The formula for the calculation of the raw revenue grants can be expressed as:

G= Pc x S x [ ( Us x RRIs ) - ( Uc

x RRIc ) ] Ps Pc

Similarly, the formula for the calculation of the raw expenditure grants can be expressed as:

G= Pc x S x [ ( Uc x CRIc ) - ( Us

x CRIs ) ] Pc Ps

Subscripts of s or c are used to describe whether it applies to the state or a particular council.

RRI = Revenue Relativity Index. CRI = Cost Relativity Index (previously known as the disability factor). They are centred around 1.00, i.e. RRIs or CRIs equals 1.00. If more than one CRI exists for any function then they are multiplied together to give an overall CRI for that function.

In the revenue calculations for both residential and rural assessments, the South Australian Commission has calculated a revenue relativity index based on the SEIFA Index of Economic Resources (from the Australian Bureau of Statistics). Where no revenue relativity index exists the RRIc = 1.0. Currently in all expenditure calculations with the exception of roads and stormwater there are no disability factors applied and consequently, CRIc = 1.0. The raw grants, calculated for all functions using the above formulae, both on the revenue and expenditure sides, are then totalled to give each council’s total raw grant figure. Any council whose raw calculation per head is less than the per capita figure, ($19.97 for 2011-12), then has the per capita figure applied. The balance of the allocated amount is then apportioned to the remaining councils based on their calculated proportion of the raw grant. The South Australian Commission determined limits are then applied to minimise the impact on council’s budgetary processes.

In the calculation of the 2011-12 grants, the South Australian Commission constrained changes to councils grants to between minus 5 and positive 12 per cent. Changes in grant for the majority of councils were in the range of minus 1.5 per cent and positive 9 per cent.

Grants to two councils were reduced at higher levels of minus 3 and 5 per cent as part of a process of decreasing grants in a manageable way for these councils and 2 councils received increased grants of 12 per cent. An iterative process is then undertaken until the full allocation is determined.

Component Revenue Grants

Component revenue grants compensate or penalise councils according to whether their capacity to raise revenue from rates is less than or greater than the state average. Councils with below average capacity to raise revenue receive positive component revenue grants and councils with above average capacity receive negative assessments.

The South Australian Commission estimates each council's component revenue grant by applying the state average rate in the dollar to the difference between the council’s improved capital values per capita multiplied by the RRIc and those for the state as a whole, and multiplying this back by the council’s population.

The state average rate in the dollar is the ratio of total rate revenue to total improved capital values of rateable property. The result shows how much less (or more) rate revenue a council would be able to raise than the average for the state as a whole if it applied the state average rate in the dollar to the capital values of its rateable properties.

This calculation is repeated for each of five land use categories, namely;

â¢ residential

â¢ commercial

â¢ industrial

â¢ rural

â¢ other.

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To overcome fluctuations in the base data, valuations, rate revenue and population are averaged over three years. Revenue Relativity Indices (RRIc) are only applied to the residential and rural valuations.

Subsidies Subsidies that are of the type that most councils receive and are not dependent upon their own special effort i.e. they are effort neutral, are treated by the 'inclusion approach'. That is, subsidies such as those for library services and roads are included as a revenue function.

For 2011-12, the South Australian Commission excluded library subsidies from the grant calculations along with the libraries expenditure function (discussed below) due to concerns over the consistency of data provided by councils to the Public Library Services section of the Department of the Premier and Cabinet.

Component Expenditure Grants Component expenditure grants compensate or penalise councils according to whether the costs of providing a standard range of local government services can be expected to be greater than or less than the average cost for the state as a whole due to factors outside the control of councils. The South Australian Commission assesses expenditure needs and a component expenditure grant for each of a range of functions and these are aggregated to give a total component expenditure grant for each council.

The methodology compares each council per capita against the state average. This enables the comparison to be consistent and to compare like with like.

A main driver or unit of measure is identified for each function. This is divided into the total expenditure on the function for the state as a whole to determine the average or standard cost for the particular function. For example, in the case of the expenditure function built-up sealed roads, 'kilometres of built-up sealed roads' is the unit of measure.

Using this example, the length of built-up sealed roads per capita for each council is compared with the state’s length of built-up sealed road per capita. The difference, be it positive, negative or zero, is then multiplied by the average cost per kilometre for construction and maintenance of built up sealed roads for the state as a whole (standard cost). This in turn is multiplied back by the council’s population to give the component expenditure grant for the function. As already indicated this grant can be positive, negative or zero.

In addition, it is recognised that there may be other factors beyond a council’s control which require it to spend more (or less) per unit of measure than the state average, in this example to reconstruct or maintain a kilometre of road. Accordingly, the methodology allows for a cost relativity index (CRI), to be determined for each expenditure function for each council. Indices are centred around 1.0, and are used to inflate or deflate the component grant for each council. In the case of roads, CRI’s measure relative costs of factors such as material haulage, soil type, rainfall and drainage.

To overcome fluctuations in the base data, inputs into the expenditure assessments (with the exception of the newly revised road lengths) are averaged over three years. The following table details the approach taken to expenditure functions included in the methodology.

For 2011-12, the South Australian Commission excluded the libraries expenditure function from the methodology, as discussed above for library subsidies. Data gathered relating to visitor numbers has shown inconsistencies over the averaging period used by the South Australian Commission (three years), with some significant fluctuations in data for many councils. This

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issue is to be investigated as part of the South Australian Commission’s upcoming major methodology review.

Table B.20 SA Expenditure F unction and units of measure

Expenditure Function Standard Cost Units of Measure

Waste Management Reported expenditures1 Number of residential properties Aged Care Services Reported expenditures1 Population aged 65+ per ABS Census and estimated resident population Services to Families and Children Reported expenditures1 Population aged 0-14 yrs per ABS Census and

Jetties and Wharves Reported expenditures1 Number of Jetties and Wharves Public Order and Safety Reported expenditures1 Total number of properties Planning and Building Control Reported expenditures1 Number of new developments and additions Bridges Reported expenditures1 Number of bridges

Other Needs Assessments Set at 1.00. Based on South Australian Commission determined relative expenditure needs in a number of areas6

1 Counci l’s expenditures reported in the South Australian Commissions’ Supplementary returns. 2 Include s both construction and maintenance activities. 3 The South A ustralian Commission has also decided, for these functions, to use CRI’s based on the results of a previous consultancy by BC Tonkin and Associates.

4 U rban properties = sum [residential properties, commercial properties, industrial properties, exempt residential properties, exempt commercial properties, exempt industrial properties]. 5 The South Australian Commission has for these functions, used CRI’s based on the results of a consultancy led by Emcorp and Associates, in association with PPK Environment and Infrastructure. Tonkin Consulting has since refined

the results. 6 Com prises South Australian Commission determined relative expenditure needs with respect to the following: â¢ Non-Resident Use / Tourism / Regional Centre - assessed to be high, medium or low

â¢ Duplication of Facilities - identified by the number of urban centres and localities (as determined by the Australian Bureau of Statistics (ABS) â¢ Isolation - measured as distance from the GPO to the main service centre for the council (as determined by the RAA) â¢ Additional recognition of needs of councils with respect to Aboriginal people - identified by the proportion of the

population identified as Aboriginal or Torres Strait Islander â¢ Unemployment - identified by the proportion of the population unemployed â¢ Capital City status - gives recognition to such things as the ability of the council to raise revenue from sources other

than rates i.e. car parking and from the Wingfield dump, and their extraordinary expenditure need i.e. due to the requirement that they maintain the entire road network within the City, and due to the daily influx of non-resident population â¢ Environment and Coastal Protection - assessed to be high, medium or low â¢ The Provision of Cultural and Tourist Facilities - assessed to be high, medium or low.

This final factor Other Needs Assessment (also known as Function 50) originates from awareness by the South Australian Commission that there are many non-quantifiable factors, which may influence a council’s expenditure, and that it is not always possible to determine objectively the extent to which a council's expenditure is affected by these factors. The South Australian Commission is aware that there are many factors, which may influence a council's expenditure and that it is not always possible to determine objectively the extent to which a council's expenditure is affected by inherent or special factors. Therefore, in determining units of measure and cost relativity indices, the South Australian Commission must exercise its judgement based on experience, the evidence submitted to the South Australian Commission, and the knowledge gained by the South Australian Commission during visits to council areas and as a result of discussions with elected members and staff.

The South Australian Commission uses the above table to enable it to calculate a council’s raw grant for each of the given functions. To do this we calculate each individual councils unit of measure per capita co mpare it with the similar figure from the table and then multiply the difference by the standard from the table and its own population. If CRIs are applicable then they must be included as a multiplier against the council’s unit of measure per capita.

It must be stressed that this only allows the calculation of the raw grant for the individual function, not the estimated grant. The calculation of the estimated grant is not possible as per capita minimums need to be applied and the total allocation apportioned to the remaining councils.

Aggregated Revenue and Expenditure Grants

Component grants for all revenue categories and expenditure functions, calculated for each council using the method outlined above, are aggregated to give each council’s total raw grant figure.

Where the raw grant calculation per head of population for a council is less than the per capita minimum established as set out in the Act, ($19.97 for 2011-12), the grant is adjusted to bring it up to the per capita minimum entitlement. The balance of the allocated amount, less allocation to other local governing bodies outside the incorporated areas, is then apportioned to the remaining councils based on their calculated proportion of the raw grant.

South Australian Commission determined limits may then be applied to minimise the impact on council’s budgetary processes. In the calculation of the 2011-12 grants, this constrained changes to councils to between minus 5 and positive 12 per cent. An iterative process is then undertaken until the full allocation is determined.

Identified Local Road Grant

In South Australia, the identified local road grants pool is divided into formula grants (85 per cent) and special local road grants (15 per cent).

The formula component is divided between metropolitan and non-metropolitan councils on the basis of an equal weighting of road length and population.

In the metropolitan area, allocations to individual councils are determined again by an equal weighting of road length and population. In the non-metropolitan area, allocations are made on an equal weighting of road length, population and the area of each council.

Distribution of the special local road grants is based on recommendations from the Local Government Transport Advisory Panel. This Committee is responsible for assessing submissions from regional associations on local road projects of regional significance.

Outback Communities Authority

The Outback Areas Community Development Trust was replaced by the Outback Communities Authority from 1 July 2010, and is prescribed as a local governing body for the purposes of the Grants The South Australian Commission’s recommendations, in the same way as the previous Trust.

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The Outback Communities Authority was established in July 2010 under legislation of the South Australian Parliament. It has a broad responsibility for management and local governance of the unincorporated areas of South Australia. The Authority has a particular emphasis providing assistance in the provision of local government type services normally undertaken by local councils elsewhere in the state.

Due to the lack of comparable data, the South Australian Commission is not able to calculate the grant to the Authority in the same manner as grants to other local governing bodies. Rather, a per capita grant has been established. The 2011-12 per capita grant was $372.70.

Aboriginal Communities

Since 1994-95 the Grants South Australian Commission has allocated grants to five Aboriginal communities recognised as local governing authorities for the purposes of the Commonwealth Local Government (Financial Assistance) Act 1995 (Cwlth).

The Aboriginal communities are Anangu Pitjantjatjara Yankunytjatjara, Gerard Community Council Incorporated, Maralinga Tjarutja Incorporated, Nepabunna Community Council Incorporated, and Yalata Community Council Incorporated.

Again due to the unavailability of data, grants for these communities are not calculated in the same manner as grants to other local governing bodies.

Initially, the South Australian Commission utilised the services of Morton Consulting Services, who completed a study on the expenditure needs of the communities and their revenue raising capacities. Comparisons were made with communities in other states and per capita grants were established.

Grants have gradually been increased in line with the increase in the general purpose pool of funding for South Australia since the initial study.

Changes to Methodology for 2011-12

There have been no changes to the South Australian Commissions methodology for 2011-12, except for the exclusion of the libraries expenditure function on the expenditure side and library subsidies on the revenue side, as discussed above.

Any developments in local government’s use of long-term financial and asset management plans. In particular, identify any developments implementing the Local Government Financial Sustainability Nationally Consistent Frameworks

Long-term Financial and Asset Management Plans

Each one of South Australia’s 68 local governments has developed and adopted a long-term financial plan and an infrastructure and asset management plan, each covering a period of at least 10 years, as required by section 122 of the Local Government Act 1999 (SA).

Many councils have found that significant additional work is required to improve the rigour of these plans. The Local Government Association of South Australia (LGASA,) funded by the Local Government Reform Fund, has assisted councils by arranging and subsidising the cost

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of Institute of Public Works Engineering Australia (IPWEA SA) providing training and additional support material for those councils.

The training provided by IPWEA SA reflects the Local Government Financial Sustainability Nationally Consistent Frameworks.

Financial Sustainability

During the year 2011-12, the LGASA revised and updated its suite of Financial Sustainability Information Papers. These series of papers maintained a focus on assisting councils with their financial sustainability reform work.

A particular emphasis in these LGASA Financial Sustainability Information Papers was consistent reminders of the importance of making careful decisions regarding infrastructure priorities based on long-term financial plans and the crucial difference between projects creating new infrastructure (which involve additional ongoing operating expenses, including depreciation) and projects renewing existing infrastructure (which do not involve any increase in operating expenses).

The LGASA’s revised Financial Sustainability Information Papers are entirely consistent with the Local Government Financial Sustainability Nationally Consistent Frameworks.

Local Government Reform Fund

The Office for State/Local Government Relations (OSLGR) and the Local Government Association of South Australia (LGASA) were successful, in early 2011, in obtaining funding of $1.65 million from the Local Government Reform Fund, for Stage 1 activities.

These activities in 2011-12 adopted principles of continuous improvement to ensure their ongoing relevance. They included:

â¢ the development of accepted standards of good asset and financial management practices

â¢ an assessment of all South Australian councils based upon those standards

â¢ the development of individual improvement plans emphasising the principles of financial and asset management, collaboration, workforce planning and climate change adaptation

â¢ the development of solutions based upon the results of the audit and content of improvement plans.

These assessments and plans were completed for all 68 South Australian local governments in May 2012.

In June 2012, funding of $910 000 for Stage 2 projects was provided by the Australian Government. These projects were:

â¢ workforce planning

â¢ climate change adaptation

â¢ data management

While projects were to have been carried out under the auspices of the LGASA, OSLGR was to have oversight of funding outputs and outcomes to ensure projects were progressed according to the agreed implementation plan.

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Any measures undertaken to develop and implement comparative performance measures between local governing bodies

Workforce Planning

The LGASA continues to extract workforce planning statistics from the South Australian Local Government Grants Commission data and presents the data in graph and table from for councils seeking comparative statistics for their workforce planning.

Financial Indicators

Each year, the LGASA assembles an update report providing the latest values, history and comparisons of key financial indicators for the local government sector as a whole. The 2012 update report (covering the eleven-year period from 1 July 2000 until 30 June 2011) included data on the:

â¢ Operating surplus (deficit)

â¢ net financial liabilities ratio

â¢ operating surplus ratio for the sector as a whole.

In addition, the report provided a comparison between categories of councils in respect of 2010-11 actual results for their:

â¢ operating surplus ratio

â¢ net financial liabilities ratio.

Any reforms undertaken during 2011-2012 to improve the efficiency and effectiveness of local government service delivery

Governance

The LGASA continued to provide a range of material, to assist councils to meet their governance obligations. These materials include model policies and procedures, guidelines, information papers and Codes of Practice.

Those published or updated in 2011-12 included:

â¢ Model Complaints Policy and Procedures

â¢ LGASA Guide Procurement Policy

â¢ LGASA Guide Policy for Disposal of Land and Assets

â¢ Internal Review of a Council Decision: Model Policy and Procedure

â¢ Model Policy for the Selection of Road and Public Place Names

â¢ Model Requests for Services Policy

â¢ Model Whistleblower Protection Policy

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Education and Training

During the year the LGASA Education and Training Service continued to provide its extensive training and support programme with more than 2 600 council members and staff attended LGASA courses and seminars during the year.

A total of 148 Council Elected Members enrolled in Online Training Modules and 39 Council Elected Members accessed the Online Self Assessment Tool.

Libraries

The LGASA took a lead role in assisting councils and the Libraries Board of South Australia to establish the One Card Network. This network began providing borrowers with better and easier access to library collections across the entire state. A close partnership was established with the Board, working with councils, to specify requirements and support LGASA Procurement to tender and contract the supplier of networked library management systems.

The tendering was estimated to have saved councils more than $2.6 million in the procurement and implementation phase, with additional annual operating savings locally. Library users gained a range of benefits including access to more than four million items across the network through real time inter-library loan arrangements.

A successful tenderer was announced at the LGASA 2011 AGM and by June 2012 some 20 library branches were using the system across six council areas.

The LGASA also participated in a Department of Education and Childhood Development (DECD) committee reviewing school-based community libraries, which is specifically considering the resourcing of these libraries and how they operate in conjunction with school services.

Council Websites

During 2011-12 the LGASA’s Electronic Services Program (ESP) focused its efforts on the rollout of Unity Dynamic Council Websites edition used by more than 60 South Australian councils. After a successful upgrade to pilot councils Alexandrina, Naracoorte Lucindale and Port Adelaide Enfield a full rollout plan delivered upgrades to all participating council websites by the end of May. The rollout programme included staff training across the state. As a shared service, Unity continues to offer a state of the art content management system tailored for councils at a cost well under those of alternative providers.

Throughout the year the ESP team worked online closely with councils and shared service partner Deloitte Digital to define and implement enhancements to the Unity6 Content Management System. The implementation of the website enhancement programme will ensure that council websites keep pace with rapidly changing technology and remain an effective portal for better communication between councils and their communities.

Local Government Research and Development Scheme

The Local Government Research and Development Scheme is a primary source of funding for research in Local Government. Funded through tax equivalent payments by the Local Government Finance Authority, it is overseen by an Advisory Committee comprising representatives from the LGASA State Executive Committee, Metropolitan CEOs, Country CEOs, Local Government trade unions, South Australian universities, the Office for State/Local Government Relations and the LGASA Secretariat.

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The scheme has approved a total of 489 projects since inception, with total approved funding of $19.4 million. This has attracted significant matching funds and in-kind support from other sources.

An Expert Panel, appointed to consider the future roles and functions of councils in South Australia, under the LGASA Local Excellence program, was announced at the LGASA General Meeting in April 2012. The Hon Greg Crafter, a former State Government Minister, was appointed Chair of the Panel and Ms Christine Trenorden - former Senior Judge of the Environment, Resources and Development Court and Associate Professor Graham Sansom - Director of the Australian Centre for Excellence in Local Government, were appointed to assist him.

The Panel was tasked with producing a report by October 2013. To assist with this task the Panel planned to seek submissions from Federal, State and Local Governments, experts, academics and the public on topics including:

Consistent with the LGASA Waste Strategy, work continued during 2011-12 in a number of areas including e-waste, recycling and the Australian Packaging Covenant.

The LGASA ran a successful e-waste Pathways Forum in June 2012, and developed a model specification for councils looking to engage with industry as part of the National Television and Computer Recycling Scheme.

The LGASA maintained its close working relationship with Zero Waste SA through a Service Level Agreement. This allowed the LGASA to act as a conduit between Zero Waste SA and councils on waste-related matters, including grant and funding opportunities. The LGASA and Zero Waste SA worked together in delivering two e-waste collections in both metropolitan and regional areas, as well as the development of a discussion paper for councils relating to e-waste.

Community Wastewater Management Schemes

About $8 million was allocated to current construction projects during the year, the fifth year of a 10 year funding agreement between the State Government and the LGASA. Three schemes were completed, with another five currently either under construction or ready to go to tender. Another $17.5 million was expected to be available for allocation to applicant councils over the remaining five years of the current agreement. Australian Government funding under the Wastewater Reuse Program was implemented over a four-year period, ending in June 2012. A total of 57 projects were undertaken, within 35 council areas, with potential water savings of approximately eight gigalitres per year. Over $17 million of Federal grant money was administered both financially and technically by the LGASA Program Team.

Planning Review

The LGASA continued its involvement in the electronic Development Assessment Interoperability Specification Land Division Pilot Project, working more closely with participating high growth councils to define and test automation of data flow between the councils and the Planning Division of the Department of Planning, Transport and Infrastructure. The continuing availability of accurate and timely data on the operation of the planning system will help councils and the State to identify areas where improvement is required.

The development of a new Local Government Planning Reform Agenda commenced in March 2012. The Reform Agenda provides a strategic framework for prioritising and coordinating a response to the key issues that are affecting councils and incorporates 37 proposals which respond to 12 key planning issues. The issues range from the broad context of the South Australian Planning Strategy to building relationships with Government, and the development of wind farms.

Supporting councils to plan for, deliver and manage large residential development is an important objective of the LGASA’s planning portfolio and a significant amount of work has been done on a suite of resources for councils. These include an economic forecasting model to assess the long-term financial implication of development and a ‘Council Guide to Development’ which provides a step-by-step guide to the development process.

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Public Health

Various sections of the new South Australian Public Health Act 2011 (SA) commenced operation in early 2012. The LGASA worked closely with State Government to ensure adequate and appropriate resources were made available to assist councils to implement the new Act.

Climate Change

During the year the LGASA continued to deliver the LGASA Mutual Liability Scheme Climate Adaptation Project, established in mid-2008.

Due for completion in late 2012 this program gave all South Australian councils a framework to understand the risks of climate change to their business operations and to plan ways to adapt in the short and long term.

Emergency Management

The LGASA developed the Emergency Assessment and Reporting System (EARS) project after identifying the need to gather centrally accurate and consistent real time information following the serious flooding events of 2010-11.

EARS will use smart phone and cloud technologies and will retain information in a central database to which councils and the emergency services will have access. A system specification for EARS was developed with input from a reference group comprising representatives from councils, the LGASA, and the State Emergency Services.

Shared Services

The LGASA played a facilitation role during the year in bringing councils together to discuss opportunities to work co-operatively together and councils continued to show strong interest in the potential to achieve efficiencies and cost savings by pooling resources. Work during the year demonstrated that key opportunities exist and are being exploited in the shared use of IT resources, road plant and equipment, administration and payroll services, and statutory functions.

LGASA Schemes

The LGASA Mutual Liability Scheme and the LGASA Workers’ Compensation Scheme exist to provide insurance, liability and risk services to Local Government and its employees. The Schemes’ management is contracted out and their operations are overseen by Boards comprising representatives from major stakeholders including relevant unions, the State Government, councils and the LGASA.

The operation of the Schemes and their day-to-day management has been a long-term success for Member Councils, resulting in significant cost reductions and excellent risk management practices for councils. However, it is appropriate that the Schemes’ administrative and governance arrangements be reviewed from time to time to demonstrate the principles of probity and good practice. A review of both Schemes was scheduled to take place in 2012-13.

LGASA Procurement

The Board of Local Government Corporate Services agreed to a name change to LGASA Procurement. That was subsequently announced at the LGASA General Meeting in April 2012.

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A sector wide procurement development survey was completed and results returned to councils and the Secretariat in March 2012, providing councils and LGASA Procurement with extremely valuable information on the current procurement practices, issues and opportunities for improvement.

A Year of Procurement Forum - Improve Your Bottom Line: The Strategic Procurement Opportunity - was held in March 2012 and was attended by over 100 delegates from the local and state government sectors.

A secondment partnership with Norman Waterhouse Lawyers was established to completely review and refresh the entire suite of documents, templates and guidelines that will ultimately provide councils with clarity, certainty, value and support throughout the procurement process.

LGASA Procurement continues to provide over 30 contracts to councils that provide good pricing and can also provide significant administrative efficiencies. These contracts have been developed using rigorous processes, careful attention to probity and meet all the requirements of the Local Government Act 1999 (SA).

Any initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander Communities.

The LGASA continue to provide support to councils involved in Native Title processes - in particular the 27 councils involved in Indigenous Land Use Negotiations in the Kaurna region.

Report from the Tasmanian Government

The methodology used for distributing local government financial assistance grants for 2011-12, including any changes in methodology from 2010-11 The Tasmanian State Grants Commission (Tasmanian Commission) operates a review policy whereby major changes to its assessment methodology are implemented every three years. Changes identified during the previous review were implemented for the 2009-10 distribution. The review undertaken in 2011-12 will be implemented for the 2012-13 distribution.

The 2011-12 distribution was a between year assessment, meaning the Tasmanian Commission only allowed data updates and minor method changes in both the general purpose and road assessments. However, despite this there were still changes in grants for most councils due to relative movements in the data used to assess councils.

Developments relating to local government’s use of long-term financial and asset management plans In 2010, through the Australian Government’s Local Government Reform Fund (LGRF), the Tasmanian Government and the Local Government Association of Tasmania (LGAT) secured funding of $870 000 through a National Partnership Agreement. The funding was used to develop and implement long-term financial and asset management planning in Tasmanian councils. All Tasmanian councils now have the long-term plans in place.

At the LGAT conference on 13 July 2012, the Tasmanian Government’s announced its intention to consult with local government on a number of initiatives to improve the financial and asset management capacity and efficiency of local government in Tasmania. Most specifically, the

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Government outlined its commitment to develop a Financial Sustainability Framework for Local Government, which aligned with the Local Government Financial Sustainability Nationally Consistent Framework.

The Financial Sustainability Framework for Local Government provides guidance for councils to:

â¢ improve the consistency and transparency of asset depreciation and revaluation practices

â¢ report the financial and asset management sustainability indicators in their financial statements

â¢ develop an appropriate review/audit process to promote compliance and quality of long term financial and asset management plans and other arrangements.

Since the development of the Financial Sustainability Framework for Local Government, the Department of Premier and Cabinet’s Local Government Division has commenced drafting amendments to the Local Government Act 1993 (Tas) (the Act) to allow for, and mandate, long term financial and asset management planning for all Tasmanian councils.

The proposal has been endorsed by the Premier’s Local Government Council (PLGC) and will ensure that the financial and asset management practices of Tasmanian councils are viable and sustainable into the future.

Actions taken to develop comparable performance measures between local governing bodies The Tasmanian Government now produces the Sustainability Objectives and Indicators (SOI) report to measure council performance on an annual basis.

The SOI project is a key initiative of the Tasmanian Government to drive sustainability reform and improve performance and to encourage the local government sector to do the same. The SOI project forms part of the Government’s Financial Sustainability Framework for Local Government, of which the overall objective is to ensure the local government sector improves its sustainability and develops and improves its financial and asset management capability and capacity.

The project allows councils to assess their performance in key strategic areas of financial and asset management, planning and development. The project is also anticipated to promote excellence in council performance and improve community engagement. It will also assist the State and Local Governments to set priorities for performance improvement within the sector.

The sustainability indicators to which council performance is compared have been developed through a comprehensive consultation process. Council’s performance against these indicators is monitored annually, and councils are encouraged to improve their performance by tracking their performance in relation to other councils:

â¢ using changes in indicators to assess or review the impacts of large projects within their municipality

â¢ communicating with their communities about their performance.

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Core local government data continues to be provided to the Australian Bureau of Statistics for its Local Government Finance Statistics and to the Tasmanian Commission for its distribution to Australian Financial Assistance Grants, and identified Local Roads Funds to Local Government.

Local Government Service Delivery

The Role of Local Government project, established by the Premier’s Local Government Council (PLGC) in April 2012, aims to establish a clear understanding of the role and capabilities of local government, identify strengths and capability gaps, and develop actions to build a sector that is sustainable, efficient, effective and responsive to community needs.

The project is to be delivered in two phases. Phase one of the project concluded in December 2012 when the PLGC approved eight role statements describing the role of local government.

Phase two of the project aims to identify strengths and capability gaps and to identify actions and strategies to strengthen the local government sector. Data will be drawn from a range of sources, including local government and community surveys, to build an evidence-based picture of the strengths and capability gaps across the local government sector in Tasmania. The PLGC will then establish working groups to make recommendations regarding actions and strategies to strengthen the local government sector in Tasmania.

Up to date information on progress of the project is available on the project’s website at www.dpac.tas.gov.au/divisions/local_government/role_ of_ local_ government2.

Local government service delivery to Aboriginal and Torres Strait Islander communities There were no specific local government initiatives undertaken in 2011-12 in relation to service delivery to the Aboriginal and Torres Strait Islander communities.

Further Information provided by the Local Government Association of Tasmania

The Local Government Association of Tasmania (LGAT) has worked in partnership with the State Government in developing new Sustainability Objectives and Indicators, in progressing the Role of Local Government project and in securing reform funding for work across the sector on long term financial and strategic asset management.

The Local Government Financial and Asset Reform Project, managed by LGAT has met all the milestones required by the Australian Government and a range of activities in this space are still being progressed. LGAT has worked with the State Government and councils to ensure an appropriate legislative mandate is progressed. An extract from our annual report 2011-12 with regard to that project is provided below, as are other items that may be of relevance and interest.

Local Government Financial and Asset Reform Project

The LGAT was successful in securing $870 000 from the Australian Government’s Local Government Reform Fund to implement frameworks for strategic asset management and long-term financial planning. The project is a partnership between the LGAT, the Australian and State Governments and all Tasmanian councils, as represented in the composition of the Steering Committee overseeing the project.

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Four Steering Committee meetings were convened from January 2011 with significant work also progressed out of session. Achievements during this reporting period include a completed Project Plan, Communications Strategy and a state Local Government Asset Management Policy as well as factsheets and newsletters for council finance and asset management contacts. An expert Working Group was formed to develop a long-term financial planning framework to be adopted by all Tasmanian councils. Further, an email elected member reference group was established to provide review and advice on major aspects of the project. The second stage of the project including supported asset management planning, introduction of the long-term financial planning framework and conducting training for both elected members and council staff has been commenced.

Review of Local Government Rating and Valuation

A review of Local Government valuation and rating was established in response to a range of issues surrounding council rating, including fluctuations arising from the re-valuation process, variation of rating values and models across councils and the desire for greater flexibility for council rating. The objective of the review process is to seek a land valuation and rating model that will is more efficient and flexible, simpler to use, cost effective, equitable and sustainable. LGAT has participated on the Steering Committee which with specialist assistance produced a discussion paper, conducted workshops, and reviewed recommendations for State Government. A suite of rating tools was developed in terms of legislative amendment. The LGAT has been forceful in its advocacy on this matter.

Sustainability Objectives and Indicators Project (SOI)

In addition to continued participation on the Steering Committee for this project, LGAT facilitated expert working groups to develop potential indicators. The LGAT had some concerns about the nature and timing of workforce development data and so the Careers Development Officer worked with the Local Government Division of the Tasmanian State Government to ensure the best outcomes for all parties. A number of issues remain to be resolved during 2011-12 following further consultation with councils.

Procurement Workshops

Health Insurance for Employees

LGAT collaborated with the Municipal Association of Victoria (MAV) to allow member councils to access a health insurance scheme which provides a competitive outcome for employees through the piggy-backing on the Victorian base - up to 30 per cent discount on premiums. The scheme is offered on a no cost basis to councils.

Local Buy

The LGAT partnered with the Local Government Association of Queensland’s procurement arm, Local Buy, to maximise the purchasing power of Local Government nationally to minimise the price from manufacturers while ensuring that dealers at the local level were not penalised in the process. Workshops were conducted in each region for council Managers and procurement staff on a regional basis to explain access, pricing and related issues with the contract.

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Waste Management

Household Hazardous Waste (HHW) Collection Program

The HHW project has been very successful during its first two years of operation.

The LGAT continued to roll-out the eDA pilot project at Hobart City Council and Northern Midlands Council. A number of technical and implementation barriers have been overcome although new issues have arisen in relation to the Tasmanian State Government’s Planning Reforms. Following successful negotiation with the Agreement the LGAT was able to run a grants round for councils to improve the reliability and validity of planning data and to develop business cases for three additional councils.

Climate Change

Partnership Committee and Work Plan

LGAT continued to liaise with the Tasmanian Climate Change Office in an effort to address some key issues facing the sector, particularly around planning and liability. A Climate Change Partnership Committee has been convened, along with working groups, and both with broadened Local Government representation, to progress priority climate change issues between Tasmania’s State and Local Governments. The Partnership Committee will oversee the development and implementation of a state-wide Climate Change Work Program on behalf of the Premier’s Local Government Council (PLGC). The Work Plan includes goals to: reduce greenhouse gas emissions; understand and communicate the implications of a national carbon price; better identify, understand and respond to climate change impacts; and develop and implement state, regional and local initiatives and policies to assist councils to adapt to climate change impacts.

Information Sharing and Toolkits

A number of case studies have been developed by Tasmanian councils and are available on the LGAT website. These case studies showcase the work being undertaken by councils to mitigate against, and adapt to, climate change. The purpose of the case studies is to share knowledge and new understandings on climate change projects in order to motivate progressive action within Local Government and local communities. A Climate Change Action Plan Template has been developed as an outcome of the 2010 Climate Change Adaptation Forums held by LGAT and the Tasmanian Climate Change Office. The template is intended as a guide to enable individual councils to set out their own frameworks for climate change action within their own

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(corporate) activities. The template provides councils with an example Climate Change Action Plan that can be adapted for each council’s situation and required purpose.

Planet Footprint

In January 2010, LGAT reached terms of agreement with Planet Footprint for the provision of data analysis services over the next three years, until the end of 2013. Planet Footprint will provide state-wide or regional aggregated data upon request from LGAT, subject to the terms of the agreement. The work with Planet Footprint continued to bear fruit with an identification that Aurora Energy may have been charging councils for the energy costs associated with water and sewerage assets post the June 2009 hand over, leading to reimbursement for affected councils.

Tasmanian Coastal Adaptation Pathways Project

LGAT and the Tasmania Climate Change Office secured $500 000 in Federal Funding for the Tasmanian Coastal Adaptation Pathways (TCAP) Project. This project, which will be delivered over 2011-12, aims to significantly improve the ability of Tasmanian communities and decision-makers to adapt to climate change. The TCAP Project will explore the types of realistic options available to councils and communities when tackling the localised effects of climate change, and provide councils with a platform to then plan and respond appropriately to likely future scenarios in their area. Working with four councils across the state, the TCAP project will follow a ‘flexible planning pathway’ that will involve participation from a range of stakeholders, including residents and other users of the study areas. The experiences and learning gained can then be used by communities and councils across Tasmania and nationally.

Report from the Northern Territory Department of Local Government

Methodology used in the allocation of the 2011-12 financial assistance grants, including any changes in methodology from 2010-11 The Northern Territory Grants Commission's (Northern Territory Commission) methodology conforms to the requirement for horizontal equalisation as set out in section 6(3) of the Local Government (Financial Assistance) Act 1995 (Cwlth).

The Northern Territory Commission, in assessing relative need for allocating general purpose funding, uses the balanced budget approach to horizontal equalisation based on the formula:

The methodology calculates standards by applying cost adjustors and average weightings to assess each local government's revenue raising capacity and expenditure need. The assessment is the Northern Territory Commission's measure of each local government's ability to function at the average standard in accordance with the national principles.

Population For the 2008-09 allocations the Northern Territory Commission resolved to use the latest ABS usual resident population figures and then adjusts the figures for estimated residency to align with the population total advised to Canberra from Northern Territory Treasury. The Northern

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Territory’s funding is based on this total population figure. The same raison d'Ãªtre was used for the 2011-12 calculations.

Revenue raising capacity As the ownership of the land on which many communities are located is vested in Land Trusts established pursuant to the Aboriginal Lands Rights (Northern Territory) Act 1976 (Cwlth), it is not, for all intents and purposes, feasible to use a land valuation system solely as the means for assessing revenue raising capacity.

The collection of actual accurate financial data through the Northern Territory Commission’s annual returns enabled a number of revenue categories to be introduced, including rates where applicable, domestic waste, poll tax and interest.

In addition, to accord with the national principles, other grant support to local governing bodies by way of the Roads to Recovery, library and local roads grants are recognised in the methodology. In the case of recipients of the Roads to Recovery grants, 50 per cent of the grant is recognised. Recipients of library grants and local roads grants have the total amount of the grant included.

For the 2011-12 allocations, financial data in respect of the 2009-10 financial year was used.

Expenditure needs The assessment of standard expenditure is based on the Territory average per capita expenditure within the expenditure categories to which cost adjustors reflecting the assessed disadvantage of each local government are applied.

The Northern Territory Commission currently uses nine expenditure categories in accordance with the Australian Bureau of Statistics Local Government Purpose Classifications.

Cost adjustors

The Northern Territory Commission uses cost adjustors to reflect a local government’s demographics, geographical location, its modes of access, and the area over which it is required to provide local government services. There are three cost adjustors being location, dispersion and Aboriginality.

Minimum grants

For most local governments, the assessed expenditure needs exceed the assessed revenue capacity, meaning there is an assessed need. In six cases, assessed revenue capacity is greater than assessed expenditure need, meaning that there is no assessed need. However, as the Commonwealth legislation requires that local governments cannot get less than 30 per cent of what they would have been allocated had the funding been distributed solely on the basis of population, six local government councils still receive a grant, or what is referred to as the minimum grant.

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Formula

1. Revenue component

All councils:

Assessed revenue raising capacity = Total identified local government revenue Total local government revenue = Assessed NT average revenue + other grant

support + budget term

Where Revenue category = Domestic waste, garbage, general rates, general

State income by revenue category 2009-10 = Actual state local government gross income Actual state local government gross income 2009-10 = $131 810 747 Other grant support = Roads to Recovery grant 2010-11

(50% recognised), library grant 2010-11 + roads grant 2010-11

Budget term Population x per capita amount

Total local government revenue 2011-12 allocations = $260 745 541

2. Expenditure components

Total local government expenditure of $260 745 451 is apportioned over each expenditure component.

a. General public services ($101 507 226)

Community population/Northern Territory population x general public services expenditure x Aboriginality

b. Public order and safety ($13 206 108)

Community population/Northern Territory population x public order and safety expenditure x (location + dispersion + Aboriginality)

To determine the local road grant, the Northern Territory Commission applies a weighting to each council by road length and surface type. These weightings are:

Road type Weighting

Kerbed and sealed 10.0

Sealed 8.0

Gravel 4.0

Cycle path 2.0

Formed 1.0

Unformed 0.4

Developments in relation to local government’s use of long-term financial and asset management plans, including any developments in implementing the Local Government Financial Sustainability Nationally Consistent Frameworks In 2011-12, significant advancements in asset management practices for local government authorities were achieved in line with the National Partnership Agreement to Support Local Government and Regional Development.

The Australian Government approved financial assistance of $1.35 million for the Department of Local Government and Regions to accelerate the implementation of frameworks to improve financial sustainability and financial and asset management of Northern Territory councils.

Funding for this project was used to deliver a suite of workshops for local government staff and elected members across the Northern Territory to enhance their understanding of council financial sustainability and develop skills to improve their respective councils’ long-term asset and financial management plans.

During the year, the Department worked in partnership with the Local Government Association of the Northern Territory to deliver a range of activities aimed at meeting the milestones of the funding agreement. Overall, the project achieved an enhanced asset and financial management framework for councils through:

â¢ a series of training sessions for staff and elected members to improve their understanding of their roles and responsibilities in relation to long-term planning, and, to emphasise the

â¢ a series of workshops for councillors and relevant staff from Northern Territory councils based on products developed by the Institute of Public Works Engineering Australia (IPWEA) tools and programmes including:

- Sustainable Communities - for elected members and senior managers of councils;

â¢ the development of regional support networks to assist councils to establish and maintain long-term plans and asset and financial management systems.

The overall output from this program has been a range of workshops and training sessions which have better equipped officers and elected members of participating Northern Territory councils with an enhanced understanding of their councils; financial sustainability and skills to improve their asset and financial management framework, strengthen council business processes and facilitate regional collaboration between councils.

The project meets many of the objectives outlined in Framework 2 Asset Planning and Management of the Local Government Financial Sustainability Nationally Consistent Frameworks.

Framework 1 Criteria for Assessing Financial Sustainability provides indicators that are used in analysing council’s financial reports. These indicators and others will be utilised in analysing the performance of councils in the Northern Territory since the local government reforms and the establishment of the new shires as of 1 July 2008.

Framework 3 Financial Planning and Reporting details the elements of reporting for a council’s strategic long term plans, budgets and annual reports. These elements were embodied in the Northern Territory Local Government Act, which came into force 1 July 2008, as minimum requirements for reporting by local government bodies.

Measures undertaken to develop and implement comparative performance measures between local government bodies.

The Department of Local Government and Regions has undertaken capacity development through the development of resources and workshops with Northern Territory shire councils to develop the use of performance measures. All councils now use these measures as a way to report service delivery performance.

However, at this stage, the Department has not instigated a program of comparative performance measures between local government bodies because of the broad variation between municipal and shire councils and among shire councils themselves. These variations include size, remoteness, revenue raising capacity and viability. These factors are a determinate of the capacity of the council to deliver services and also for the types of services that are delivered. For example, remote, rural, and predominately Indigenous, shire councils have different service delivery priorities and capacity to the much larger urban based municipal councils.

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These differences in location, culture, size and revenue make comparative performance measures between local government bodies in the Northern Territory difficult to assess. These may also lead to inappropriate conclusions if the specific historical context of each council is not considered in the analysis.

Reforms undertaken during 2011-2012 to improve the efficiency and effectiveness of local government service delivery During 2011-2012 shire councils worked cooperatively at a regional level to identify ways to improve the efficiency and effectiveness of service delivery. Each of the three Northern Territory regions planned different strategies to do this. Some common themes were:

Any initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities The preponderance of shire service delivery in the Northern Territory is to remote communities whose population is nearly entirely Indigenous. A large majority of these communities are on Aboriginal land. A key reason for implementing the 2008 local government reform was to improve the quality of service delivery to these communities and evidence to date indicates that service delivery in many locations has continued to improve significantly.

More recently, the funding guidelines for the special purpose and Closing the Gap grants have been revised to achieve greater alignment with council strategic and operational plans in relation to the delivery of core local government services.

This has seen funding being provided to councils for the provision of staff housing, recreational facilities, building renovations and upgrades and the replacement of plant and machinery to ensure councils can deliver core local government services in a timely and efficient manner.

In addition, shire councils have been significant contributors to the Local Implementation Plans (LIPs) being developed in the Territory Growth Towns. The LIPs are collaborative community based plans which aim to coordinate the activities and initiatives of all spheres of government. The Growth Towns are the twenty major remote population centres and include the Australian Government’s Remote Service Delivery priority locations under the National Partnership Agreements and National Indigenous Reform Agreement.

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Report from the Local Government Association of the Northern Territory (LGANT)

Measures taken during 2011-2012 to improve the efficiency and effectiveness of local government to deliver services Some of the more significant measures undertaken during the year were:

â¢ made available an on-line gap-analysis tool for all councils to use for their workforce development plans for their employees

â¢ secured funding from the Northern Territory Department of Health to employ a Waste Management Coordinator based in Alice Springs to work with councils in that region on matters of compliance in terms of landfill site management

â¢ held the ‘Good Governance 2012’ event which:

- was funded by the Federal Department of Families, Housing, Community Services and Indigenous Affairs

- provided professional development to 123 elected members of 15 (out of 16) councils in the Northern Territory

- included activities relevant to the needs and roles of elected members as one means of improving the good governance of councils.

â¢ training was delivered between August 2011 and February 2012 to 13 local government employees who completed a Certificate IV in Workplace Training and Assessment. The purpose of this training is to bring more resources to the effort of delivering elected member training in-house in specific areas of need such as induction training for new councillors

â¢ LGANT partnered with the Local Government and Shires Association of NSW to make available local government specific training webinars over the Internet to Northern Territory councils.

Developments relating to local government’s use of long-term financial and asset management plans Two project officers were employed and based in Darwin and Katherine and a consultant commissioned in Alice Springs all of whom worked with councils to develop their asset management and long term financial plans.

All councils in the Northern Territory either have long-term financial and asset management plans in place or are close to completing them.

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Actions taken to develop comparable performance measures between local governing bodies All councils are required under the Local Government Act to report on their service delivery efforts in their annual reports and all have done so. Some of the data reported is comparable between councils and much of it was collected by the Northern Territory Grants Commission.

Examples of continuous improvement that deliver significant cost savings for local government

â¢ councils continued to operate the shared services subsidiary, CouncilBIZ, in order to achieve savings with information and telecommunications infrastructure and support services by having them managed centrally

â¢ changes to the Local Government (Accounting) Regulations were introduced which enabled councils to better procure goods and services through tenders

â¢ councils were able to achieve savings by accessing mobile waste bins and various items of plant and equipment through the Local Government National Purchasing Network.

Improvements in local government service delivery to Aboriginal and Torres Strait Islander communities All Northern Territory councils are involved in service delivery to Aboriginal and Torres Strait Islander citizens. Municipal councils tend to provide core local government services (for example, waste management, road construction and maintenance, public libraries and swimming pools) whereas for shires the range of services is more diverse and includes:

â¢ services provided under contract on behalf of the Northern Territory government (for example, power, water and sewerage services in remote towns)

â¢ services funded from grants provided by the Territory or Australian Governments (for example, aged care, child care, public housing and Centrelink).

All councils were involved to differing extents in improving in service delivery including:

â¢ organisational changes including reviews of systems and processes that increase councils’ capacities and efficiencies in delivering services

â¢ the facilitation and involvement in National Aboriginal and Torres Strait Islander Observance Day celebrations, local festivals and sporting days

â¢ the upgrade or maintenance of community facilities including halls, offices, multi-purpose centres and broadcasting facilities

â¢ the upgrade and maintenance of public housing stock

â¢ the upgrade and maintenance of local roads and causeways.

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Report from the Australian Capital Territory Department of Territory and Municipal Services

Any development in local government’s use of long-term financial and asset management plans, in particular, please identify any developments in implementing the Local Government Financial Sustainability Nationally Consistent Frameworks The ACT has a Legislative Assembly which combines state and local government functions, however the ACT does not have local government as such. Local government functions are delivered by a number of directorates. The Territory and Municipal Services (TAMS) Directorate delivers the bulk of those services including roads, parks and reserves, public open spaces, footpaths, cycle paths, a public transport system (ACTION), landfills, waste collection, recycling, public libraries, cemeteries and domestic animal services.

TAMS also manages and maintains Canberra’s built environment. An important element of that is ensuring that the Government’s many infrastructure assets are strategically planned, built and maintained.

The ACT Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for ACT Government directorates. The FMA, and the financial management guidelines issued under the Act, require a directorate’s financial statements to include:

â¢ an operating statement

â¢ a balance sheet as at the end of the year

â¢ a statement of changes in equity for the year

â¢ a cash flow statement for the year

â¢ a statement of appropriation for the year.

The financial statements are prepared in accordance with both the Australian Accounting Standards and ACT accounting policies. Financial statements are prepared using an accrual basis of accounting.

TAMS produces controlled and territorial financial statements. The controlled financial statements include income, expenses, assets and liabilities over which the Directorate has control. The territorial financial statements include income, expenses, assets and liabilities that the Directorate administers on behalf of the ACT Government, but does not control. The purpose of the distinction between controlled and territorial is to enable an assessment of the Directorate’s performance against the decisions it has made in relation to the resources it controls, while maintaining accountability for all resources under its responsibility.

During 2010-11 an ACT Expenditure Review and Evaluation Committee engaged with TAMS to identify opportunities for improvements in its structure, processes and work practices. The review consisted of four parts: TAMS overall structures and processes; the underlying budget drivers; parks and city services; and expenditure and contracts. Implementation of the recommendations has resulted in a more robust financial framework and improved fiscal control throughout the Directorate. A number of recommendations provided for a longer-term focus and have been incorporated into the Directorate’s broader improvement programme.

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Any reforms undertaken during 2011-12 to improve the efficiency and effectiveness of service delivery Significant achievements for TAMS in 2011-12 include the ongoing management of one of the largest infrastructure capital works programmes since self government. During 2011-12 TAMS delivered a significant portion of the ACT Government’s Capital Program, with works in excess of $191 million.

Transport reforms undertaken in 2011-12 were designed to improve traffic flow and safety. Projects included completing the Gungahlin Drive Extension, the Kings Highway realignment and the Tharwa Bridge upgrade as well as progressing the Monaro Highway duplication. Construction tenders were progressed for the Belconnen to City transitway, Parkes Way widening, Cotter Road duplication, Sutton Road upgrade and Majura Parkway.

Several projects were also undertaken to improve sustainable transport options. In May 2012, ACTION implemented a new network (Network 12) which included services to the new Gungahlin suburbs of Bonner, Crace, Forde and Casey; improvements to existing services in Kippax, central Canberra, Fyshwick and Majura Park; improved connections across the network; and the addition of a high frequency link between Woden and Canberra Hospital.

ACTION also negotiated the purchase of 20 articulated buses - the first such buses to be purchased in over 20 years.

The environment continued to be a key area of focus. As part of the Waterways Restoration Program willow debris was removed from over 30 kilometres of waterway, and 6 100 native plants replaced willows removed from along the Molonglo River at Oaks Estate and below Scrivener Dam.

The ACT became the first jurisdiction in Australia to implement the new National Television and Computer Recycling Scheme. The free scheme commenced in May 2012 and enabled Canberrans to dispose of their unwanted televisions, computers and computer peripherals such as printers, keyboards, mice and hard drives.

Roads

Through Roads ACT, TAMS manages the construction, operation and maintenance of roads and associated infrastructure such as bridges, community paths, driveways, street signs, line marking, traffic signals, street lighting and stormwater.

During 2011-12, Roads ACT carried out work funded under the Australian Government’s Black Spot Program. The Australian Government provided $966 000 in 2011-12 to the ACT Government as part of the ongoing funding for the Black Spot Nation Building Program package.

The 2011-12 road infrastructure programme was designed to reduce road congestion, improve safety and service areas of new development. Highlights included:

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â¢ completing construction of the Gungahlin Drive stage 2 works to finalise the duplication from Barton Highway to Glenloch Interchange. This included the construction of nine major bridges and a number of overpasses

â¢ completing construction of the Kings Highway realignment project, including a new 5.5 kilometre stretch of the Kings Highway between Queanbeyan and Bungendore which had a poor safety record.

In 2011-12, Roads ACT developed asset operation plans for lines and signs, driveways and roadside safety barriers and is currently working on street lights. An inspection procedure for retaining walls and free standing walls was developed to capture asset attributes and condition information for the Integrated Asset Management System.

The current Strategic Asset Management Plan (SAMP) covers the period 2010-12 and in March 2012 was converted into a format consistent with the ACT Treasury SAMP Framework. Roads ACT have commenced drafting the SAMP for the period of 2013-15.

Public Transport

ACTION runs regular bus services and dedicated school services in Canberra suburbs. It operates a special needs transport service for clients of the Education and Training Directorate (ETD) as well as charter services for schools, sporting bodies and other organisations hosting events and festivals in the ACT. ACTION’s objective is to deliver safe, reliable, accessible and responsive public transport in the ACT.

In 2011-12, ACTION received $9.551 million over four years as part of the Transport for Canberra programme to deliver additional regular route services. This funding enabled ACTION to implement a new network (Network 12) on 28 May 2012. The new network:

â¢ delivered more Red Rapid services from Gungahlin in the morning peak period

â¢ improved services to the Australian National University and city west

â¢ improved services to Fyshwick and the Canberra railway

â¢ provided new services to the suburbs of Forde, Bonner, Casey and Crace

â¢ provided services to Majura Park

â¢ improved frequency on the Blue Rapid between Tuggeranong, Woden and the City.

ACTION also received $9.007 million over four years through the 2011-12 ACT Budget to assist in meeting the increased costs of delivering public transport to the community.

An increased focus on service reliability resulted in ACTION meeting or exceeding its established target of 99.5 per cent each month during 2011-12 for services delivered.

In 2011-12, the ACT Government provided $5.581 million to deliver improvements to safety. These included: the replacement of the radio communications system; a bus park brake alarm tester; 74 new driver seats; 54 passenger safety panels to the Scania compressed natural gas fleet; protective security infrastructure; pedestrian lighting and road surface repairs at bus depots; and closed circuit television improvements.

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ACTION continued its focus on asset management by finalising water efficiency improvements; commencing the upgrading of fuel facilities; commencing the recommissioning of the Woden bus depot; and the rebuilding of seven engines, eight transmissions and 19 differentials.

Throughout the year ACTION used the recently implemented MyWay ticketing system to more accurately record patronage. In February 2012, ACTION experienced its highest ever recorded daily total of 80 063 trips.

During 2011-12, ACTION continued its focus on corporate governance by establishing a new governance and policy development framework under which policies and procedures are developed and continually updated. A new customer service charter and improved feedback and complaints handling processes were implemented. These changes have led to significant improvements in how the business complies with legislative requirements including accreditation.

In October 2011, ACTION launched its official Twitter site to keep the community informed about a range of issues including major service disruptions, event related bus services, upcoming changes or improvements, new bus stops or bus stop closures and consultation opportunities. In April 2012, ACTION commenced a trial using Twitter to notify the public of morning service cancellations. As at 30 June 2012, 1 352 users had joined the ACTION Twitter site.

At the end of June 2012, ACTION had 403 buses in-service, including 221 wheelchair accessible buses and 185 Euro 3 or better emissions buses. During the year, ACTION continued its programme to replace 135 buses for which the ACT Government has provided $75.5 million. In 2011-12, this resulted in the delivery of 130 buses including 19 easy access MAN buses and 11 easy access Scania steertag buses bringing the total number of buses delivered from this programme to 115. The remaining 20 buses will be new easy access Scania articulated buses, which are programmed for delivery from July 2012 to April 2013. ACTION is aiming to achieve the Disability Discrimination Act 1992 (Cwlth) requirement that 55 per cent of the fleet be accessible by December 2012.

By June 2012, ACTION had also completed the installation of bike racks on all in-service buses able to be safely fitted with bike racks. This has resulted in 81 per cent of the fleet being bike rack equipped. The remaining 19 per cent of in-service buses are unable to be fitted with bike racks due to structural reasons or maximum length restrictions established under Australian Standards.

Parks and City Services

TAMS is responsible for the management of the majority of ACT parks, reserves, public open spaces and city places, including lakes and Canberra’s urban trees. TAMS also manages biosecurity, the Domestic Animal Services and other licensing and compliance services, including ranger services and permits for public land use.

Following community consultation and with the involvement of the Tidbinbilla Board of Management, the Tidbinbilla Revised Draft Plan of Management 2011 was prepared. The Plan was referred to the Legislative Assembly Standing Committee on Planning, Public Works and Territory and Municipal Services in April 2011. The committee conducted an inquiry into the plan and tabled a report on 1 May 2012.

TAMS manages approximately 700 000 trees throughout the city consisting of 300 species making it one of the largest and most diverse urban forests in Australia.

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In 2010-11, the Commissioner for Sustainability and the Environment (the Commissioner) investigated the ACT Government’s management of urban trees and the need for an enhanced programme of urban tree renewal. The report was tabled in the ACT Legislative Assembly in April 2011 and a response by the ACT Government was tabled in February 2012. The Government agreed or agreed in principle to 40 of the 44 recommendations.

In 2011-12, TAMS continued to implement the Commissioner’s agreed recommendations. Processes have been developed for implementing a number of the other agreed or agreed in principle recommendations including:

â¢ increasing the amount of programmed tree maintenance work delivered which has increased productivity

â¢ the integration of tree management programmes including tree maintenance, removal and planting so that a more coordinated approach to these programmes has been achieved

â¢ commencement of a review of existing policy and legislation around the management and protection of trees

â¢ reconvening a cross agency Tree Network Committee to improve decision making in relation to trees managed by the ACT Government

â¢ increasing levels of training for staff involved in decision making relating to urban trees.

TAMS is responsible for urban open space maintenance and management across Canberra. This includes mowing, cleaning toilets and shopping centres, maintenance of playgrounds, horticultural work, pest control and management of urban lakes and wetlands. Highlights for 2011-12 included:

â¢ mowing 34 per cent more area compared to the 2010-11 programme

â¢ coordinating the floral display for Floriade, one of Australia’s largest horticultural shows that attracts over 400 000 visitors annually. Floriade was selected as one of the sites Her Majesty Queen Elizabeth ll visited on her jubilee tour in October 2011

â¢ installing 37 recycling bins in the City centre as part of a trial that commenced in December 2011 and concluded 30 June 2012. Results of the trial indicate that approximately 18 tonnes of recyclable material was collected

â¢ restoring Molonglo Reach foreshores involving the removal of pest willows and other woody weeds and revegetation using native plants to restore the habitat and improve water quality

â¢ maintaining 503 playgrounds including nine skate parks, with seven of these playgrounds being renewed in 2011-12.

TAMS is responsible for the planning and management of parks, reserves and rural lands. It protects and conserves the natural resources of the ACT and promotes appropriate recreational, educational and scientific uses of the ACT’s parks and reserves. It supports ParkCare/Landcare groups and coordinates hazard reduction activities under the Bushfire Operations Plan.

Highlights in 2011-12 included:

â¢ completing the Gibraltar Peak Trail, creating a greater diversity of day walking opportunities in the Tidbinbilla Nature Reserve

â¢ undertaking the Waterways Restoration Program involving cleanup of flood debris, control of willow and other woody weeds and land rehabilitation in priority waterways. The strategic

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removal of willow, a nationally significant weed, has been complemented by the planting of 6 100 native plants. These native plantings have transformed riverside environments from one dominated by exotic species to one where native plantings can begin to take hold and attract native fauna such as invertebrates, birds and small reptiles

â¢ planting of 51 000 trees in the Murrumbidgee River Corridor under the One Million Trees initiative.

Libraries ACT

Libraries ACT is made up of nine public libraries, two mobile libraries, the home library service and the ACT Heritage Library. In 2011-12 Libraries ACT membership was 62 per cent of the Canberra population.

Libraries ACT continues to deliver and support literacy and lifelong learning through books, electronic resources and programmes, and saw a 10.7 per cent increase in loans in 2011-12 compared to the previous year.

Libraries ACT offered a wide range of programmes for the community in 2011-12. Attendance at Giggle and Wiggle for 0-2 year olds and Story Time for 3-5 year olds is continuing to increase in popularity, along with programmes for adults and children on topics such as science, social networking, cyber safety, nutrition, music for babies and toddlers, flower arranging, financial management, and the digital television switchover.

As part of Australia’s National Year of Reading in 2012 Libraries ACT led a group of people from across Canberra to deliver projects to improve literacy and celebrate reading locally. Following the launch of the redesigned Libraries ACT website in 2011, use of social media including Twitter and Facebook has continued to grow as an additional channel for communicating with the community.

Libraries ACT continued to expand its partnerships with other ACT Government directorates by encouraging the use of libraries as meeting places for community engagement, education and information sharing and to seek feedback from the community.

Libraries ACT recognises that as technology evolves the popularity of digital resources, including electronic books and downloadable media, will increase. In 2011-12, Libraries ACT continued to monitor and implement new digital services, such as Freegal music downloads.

National Arboretum Canberra

Responsibility for the National Arboretum Canberra (the Arboretum) transferred to TAMS in November 2011 as part of its transition from a major development to an operational entity. TAMS continued to address the master plan for the Arboretum, based on the 100 forests/100 gardens concept.

Sixteen forests were planted bringing the total number of forests to 87 with 36 000 trees planted as at 30 June 2012. Significant works undertaken in 2011-12 include:

â¢ continuing the construction of the visitor centre, to house the National Bonsai and Penjing collection

â¢ completing the ActewAGL Discovery Garden

â¢ constructing the pedestrian path and landscape through the central valley

â¢ undertaking further development of the irrigation system, including non-potable water supply, filter stations and pumps

â¢ undertaking landscape plantings around the dam, and earthworks and plantings at the front entrance.

ACT NOWaste

ACT NOWaste manages the domestic rubbish and recycling collections for over 149 000 Canberra households. It manages three resource management centres, including Canberra’s domestic Materials Recovery Facility and Landfill at Mugga Lane and four regional recycling centres that contain waste and recycling drop-off facilities. It supports the recycling sector and helps Canberrans recycle more effectively through its industry support programmes, collection and analysis of data about waste and recycling, education and promotional activities and the development of new recycling initiatives and facilities.

Resource recovery activities by the ACT Government and private sector delivered excellent results in 2011-12. A total of 751 159 tonnes of material were recovered with an additional 317 842 tonnes sent to landfill. The overall waste recovery rate was 70.27 per cent, down from 75.1 per cent in 2010-11. This continues the long term result of over 70 per cent resource recovery since 2003-04. The increase in waste to landfill for 2011-12 was significantly impacted by the cleanup of a failed waste recycling company that resulted in an additional 54 114 tonnes of waste that was sent to landfill.

Overall waste generation is increasing. According to the Environment Protection and Heritage Council’s National Waste Report 2010, the ACT is one of the highest generators of waste per capita in Australia. Over the last 10 years, total waste generation in the ACT has grown at over four per cent per annum on average, outstripping population growth. Increasing waste generation leads to increases in both resource recovery and waste to landfill.

ACT NOWaste provides information and education aimed at increasing recycling and ensuring services and facilities are used correctly. ACT NOWaste delivered presentations and tours to over 11 000 visitors and provided around 2 000 email responses to waste and recycling queries. Data from the Materials Recovery Facility that processes the kerbside recycling indicates that education has been effective. Results for 2011-12 show a recycling rate of 92 per cent of all material collected, with more than 58 000 tonnes of material despatched for recycling.

The Bulky Waste Collection Service which provided bulky waste collections to households on a fee-for-service basis, with one free collection for eligible households, will continue into 2012-13. The ACT Government will review the results when considering whether to offer the service on a permanent basis.

TAMS continued to consider options regarding recycling of both compact fluorescent lightbulbs and batteries, and any associated funding requirements. Considerations include the need for a health and safety assessment and the feasibility of extending collection facilities to the recycling drop-off centres.

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Highlights in 2011-12 included:

â¢ the ACT became the first jurisdiction in Australia to implement a free electronic waste recycling service which is part of the new National Television and Computer Recycling Scheme. In the first six weeks of operation up to 30 June 2012, a total of 759 tonnes of televisions and computers were recycled

â¢ capturing 29 788 mega watt hours of methane at Canberra’s active landfill at Mugga Lane and Canberra’s former landfill at West Belconnen. This was converted into electricity for approximately 3 000 homes

â¢ securing land for the Mugga stage five landfill expansion.

Any initiatives undertaken in relation to local government service delivery to Aboriginal and Torres Strait Islander communities Aboriginal and Torres Strait Islander people remain the most disadvantaged group in Australian society. Life expectancy for Aboriginal and Torres Strait Islander Australians is shorter, health is worse, incomes are lower, education achievements are lower and crime statistics are higher.

The ACT Office of Aboriginal and Torres Strait Islander Affairs provides strategic advice to the Minister for Aboriginal and Torres Strait Islander Affairs on issues affecting Aboriginal and Torres Strait Islander people living in the ACT. The Office coordinates a whole-of-government approach to issues affecting Aboriginal and Torres Strait Islander residents and provides secretariat and administrative support to the Aboriginal and Torres Strait Islander Elected Body and the United Ngunnawal Elders Council and also administers the ACT Aboriginal and Torres Strait Islander Traineeship Program.

The ACT Government has been an active participant in the National Indigenous Reform Agenda that directs effort to close the gap on Aboriginal and Torres Strait Islander disadvantage at both the national and ACT levels.

The ACT and the Australian Governments signed an Overarching Bilateral Indigenous Plan in March 2012. The Plan encapsulates the ACT Government’s agreement to undertake annual reporting on ‘Closing the Gap’. In 11 June 2012, the Minister for Aboriginal and Torres Strait Islander Affairs released the ACT Closing the Gap Report 2012 on the ACT’s progress on the seven COAG Building Blocks:

â¢ early childhood

â¢ schooling

â¢ health

â¢ economic participation

â¢ healthy homes

â¢ safe communities

â¢ leadership and governance.

The ACT Closing the Gap Report 2012 is available on the internet at www.dhcs.act.gov.au/multicultural.

As of 30 June 2012, self-identified Aboriginal and Torres Strait Islander people represented 0.9 per cent of the total full time equivalent of the ACT Public Service workforce. The ACT Public

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Service has set a target to more than double the employment level of Aboriginal and Torres Strait Islander people to two per cent of the total full time equivalent of the ACT Public Service. The ACT government has a number of programmes in place to meet this ambitious target.

Disability ACT has developed a policy framework for Aboriginal and Torres Strait Islander people with a disability and their families through its Future Directions: Towards Challenge 2014 initiative. The framework’s objectives include providing culturally competent services, developing culturally competent staff, improving communication and developing strategies to attract and retain Aboriginal and Torres Strait Islander staff.

Housing ACT have committed to reducing Aboriginal and Torres Strait Islander homelessness by one third under the National Partnership Agreement on Homelessness. In order to meet this target the ACT undertook a number of approaches to ensure that people who identify as Aboriginal and Torres Strait Islander receive the accommodation and support they require. One of the approaches in the ACT has been the implementation of the Central Access Point for access to the homelessness service system. This service has a designated position for an Aboriginal or Torres Strait Islander worker who engages with the population group to ensure they can access services. The Joint Government Steering Committee of the Central Intake Service is exploring prioritising Aboriginal and Torres Strait Islander people into accommodation and support services.

The ACT Aboriginal and Torres Strait Islander Elected Body provides an important service to Aboriginal and Torres Strait Islander Canberrans and the wider ACT community by receiving, and passing on to the Minister, the views of Aboriginal and Torres Strait Islander people living in the ACT on issues of concern to them. The Elected Body runs regular community consultations to foster discussion about issues of concern to Aboriginal and Torres Strait Islander people living in the ACT and conducts research and community consultation to propose programmes and design services for Aboriginal and Torres Strait Islander people living in the ACT for consideration by the government and its agencies.

The United Ngunnawal Elders Council is a significant Aboriginal body providing advice to the ACT government in relation to heritage and connection to land matters for the Ngunnawal people. The council comprises representatives nominated by each of the Ngunnawal family groups and meets up to four times a year.

The 2011-12 Budget, provided one-off funding of $36 000 to conduct two Aboriginal Elders Camps. Funding provided for the Aboriginal Elders Camps is sensitive to the cultural needs of all Aboriginal traditional custodians of the ACT. The Camps focused on the reconciling of the different Aboriginal traditional custodian groups which make up the regional area of the ACT. Representatives of the traditional family groups have the opportunity to discuss issues of mutual interest in a non-combative environment.

In 2011-12, the Aboriginal and Torres Strait Islander Services Unit continued to provide support services to the Wreck Bay and Jervis Bay communities including four joint visits to kinship carers; linking families to supports such as the Nowra Aboriginal Medical Service; family mediation; advocacy and other support as needed.

The ACT Public Service Aboriginal and Torres Strait Islander Traineeship Program is an entry level programme for Aboriginal and Torres Strait Islander people who want to pursue a career in the ACT Public Service. The Traineeship programme is funded by the Department of Education, Employment and Workplace Relations and is administrated by the Directorate’s Office of Aboriginal and Torres Strait Islander Affairs.

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Report from the Australian Local Government Association (ALGA)

Financial assistance grants distribution methodology ALGA has highlighted in its Budget submissions and most recently in its submission to the Commonwealth Grants Commission (CGC) for the review into financial assistance grants, a number of issues in relation to the fundamental components of the grants, namely their insufficient quantum and the lack of a relationship between the current indexation and the real rate of cost increases faced by councils. However, issues relating specifically to the distribution methodology are unique to each jurisdiction and the state and territory local government associations provide input on these methodologies.

Developments in relation to local government’s use of long-term financial and asset management plans Local government is currently confronting a significant asset management challenge. Its infrastructure renewals backlog was estimated in a 2006 PriceWaterhouseCoopers report commissioned by ALGA, to be $14.5 billion nationally and this number is expected to have grown since then.

To address this infrastructure renewals backlog, ALGA identified a two-pronged approach. This involved advocating a better funding model for financial assistance grants from the Australian Government to local government, complemented by the need for internal local government reforms to ensure local community infrastructure could be better managed over the lifecycle.

The Australian Government has shown its commitment to working with local government to achieve real and meaningful outcomes for local and regional communities. This includes the establishment of the Regional and Local Community Infrastructure Program, the establishment of a Local Government Reform Fund aimed at improving asset and financial management and commitment to a referendum to ensure the Australian Government can directly fund local government activities and projects.

ALGA has always welcomed the Government’s confidence in local government and its ability to deliver infrastructure projects in order to support local communities. This was most clearly seen through the provision of funding to deliver thousands of large and small ‘shovel ready’ to local and regional communities under the Regional and Local Community Infrastructure Program. These projects have been delivered on time and efficiently, and will help drive productive capacity in the Australian economy and improve social cohesion by fostering outcomes at the local level.

The Australian Government’s Roads to Recovery programme, is highly valued by local and regional communities. They benefit directly from improved road safety. It is a popular programme that has the support of all political parties and through it, local government has produced value for money outcomes nationally.

The ALGA strongly believes that the Roads to Recovery programme should be made permanent to provide funding certainty to local government which, given the ongoing nature of the road asset management task, is crucial and the funding should be indexed annually to reflect the constant increases in local road costs faced by councils.

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Appendix B

ALGA has undertaken a detailed analysis of the current state of local roads networks. That analysis shows that there is a considerable backlog of infrastructure spending. The research shows that in order to restore and maintain the current network would require additional funding of approximately $1.2 billion per annum.

ALGA is seeking additional Australian Government funding to bridge the gap. This additional funding should comprise increased Roads to Recovery funding, funding of a Strategic Regional Roads Program, a dedicated programme of funding for bridge maintenance and additional identified roads grants which are part of FAGs funding. There should be a review of the distribution of FAGs identified for roads so that they more accurately reflect needs noting that any changes in formula should not result in any council being financially disadvantaged.

Given the importance of roads as local government’s single largest asset, there is a need to ensure security of infrastructure funding if local government is to make the best use of long-term asset management plans.

Measures taken to develop comparative performance measures between local governing bodies At the national level, there are no overarching systems designed to produce comparative performance measures and analysis between councils; these are usually currently determined by individual state and territory governments and apply on a jurisdiction-by-jurisdiction basis. ALGA therefore expects that individual jurisdictions input, as well as direct input from ALGA’s member associations, will address this issue.

As a general observation, ALGA appreciates that accurate, timely and consistent data is critical to enable credible comparative analysis of performance and outcomes. Numerous Australian Government and parliamentary reports over recent years have highlighted that lack of consolidated, quality data on local government is a significant problem.

The need to resolve data issues for local government remains important from a national perspective. ALGA has outlined a case for Australian Government funding to assist in the measurement of improved local government service delivery in the Federal Budget submission 2011-12. In particular, it cited the Productivity Commission’s finding in the Assessing Local Government Revenue Raising Capacity report (April 2008) that ‘[t]here is a need for the Australian Bureau of Statistics and various grants commissions to improve the consistency and accuracy of the local government data collections.’

ALGA also notes that a significant proportion of the funding under the Local Government Reform Fund was provided to the Australian Centre of Excellence for Local Government to improve local government data.

Any reforms undertaken during 2011-12 to improve the efficiency and effectiveness of local government service delivery Local government’s key objective is to serve its communities. Therefore, continued improvements in service delivery are a primary goal.

As previously discussed, a significant barrier to improvement is the lack of financial security, combined with the increased overall financial pressures placed on local governments.

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When the funding model for local government was devised in the early 1980s, local council’s responsibilities were generally restricted to the three ‘r’s’ (roads, rates and rubbish). However, since that time and for many reasons, the balance of local government resources directed towards social services continues to increase, as does the cost of providing those services.

Local government has had to make difficult budgetary decisions, in order to maintain service provision, often, in the face of declining levels of support from state and Australian Government grants. Local councils continue to provide essential services such as homecare, libraries, low-cost childcare and elderly and disabled support in spite of current financial issues.

In April 2006, all Australian governments signed the Intergovernmental Agreement Establishing Principles Guiding Intergovernmental Relations on Local Government Matters (the IGA). The IGA outlines a set of principles designed to establish an ongoing framework to address future cost shifting, and prevent the cost shifts that have occurred in the past. ALGA articulates that this practice costs local councils up to $1 billion each year.

The IGA was due for review in April 2011 and there remains a need for a more fundamental look at how the IGA could be strengthened to reduce cost-shifting. Until the burden of cost shifting is lessened the overall efficiency and effectiveness of local government service delivery will not reach its potential.

Improvements in local government service delivery to Aboriginal and Torres Strait Islander communities ALGA supports the Closing the Gap initiatives and notes the important work of local councils in improving local government service delivery to Aboriginal and Torres Strait Islander communities.

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C

Local government grants commissions in each state and the Northern Territory use distribution models to determine the grant they will recommend be allocated to councils in their jurisdiction. They use one model for allocating the general purpose grant among councils and a separate model for allocating the local road grant. This appendix provides a comparison of the approaches the grants commissions used for determining 2011-12 grants.

General purpose grants

In allocating the general purpose grant between councils within a jurisdiction, commissions are required under the Local Government (Financial Assistance) Act 1995 (Cwlth) (the Act) to comply with agreed National Principles (see Appendix A). These principles require commissions to satisfy two main objectives:

â¢ to allocate the general purpose grant pool between councils on a horizontal equalisation basis (National Principle A1).

â¢ to ensure that, when allocating the general purpose grant pool between councils, all councils receive at least the minimum grant (National Principle A3).

In practice, commissions determine an allocation that ensures all councils receive at least the minimum grant with the remaining grants allocated, as far as practicable, on a horizontal equalisation basis.

Usually, this results in commissions adopting a three-step procedure to determine general purpose grant allocations.

Step 1 Commissions determine an allocation of the general purpose grant between councils on a horizontal equalisation basis.

Step 2 All councils receive at least the minimum grant. In most jurisdictions, in order for all councils to receive at least the minimum grant, grants to some councils have to be increased relative to their horizontal equalisation grant.

Step 3 If grants to some councils are increased in step 2, grants to other councils must decrease relative to their horizontal equalisation grant. This is achieved by a process called ‘factoring back’.

In Step 3, because grants to some councils are decreased, the resultant grant may be less than the minimum grant. As a result, Steps 2 and 3 of this procedure may need to be repeated until all councils receive at least the minimum grant and the general purpose grant pool for the jurisdiction has been completely allocated. More details on the approaches grants commissions use for Steps 1 and 3 are below.

Comparison of local government grants commission distribution models

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Allocating on a horizontal equalisation basis

An allocation on a horizontal equalisation basis is defined in s. 6 of the Act. Horizontal equalisation:

… ensures that each local governing body in a state [or territory] is able to function, by reasonable effort, at a standard not lower than the average standard of other local governing bodies in the state [or territory]. [It] takes account of differences in the expenditure required to be incurred by local governing bodies in the performance of their functions and in their capacity to raise revenue.

The ‘average standard’ is a financial standard. It is based on the expenditure undertaken and revenue obtained by all councils in the jurisdiction.

Horizontal equalisation, as defined in the Act, is about identifying advantaged and disadvantaged councils and bringing all the disadvantaged councils up to the financial position of a council operating at the average standard. This means that the task of the commissions is to calculate, for each disadvantaged council, the level of general purpose grants it requires to balance its assessed costs and assessed revenues.

When determining grant allocations on a horizontal equalisation basis, commissions use one of two distribution models:

â¢ balanced budget - based on the approach of assessing the overall level of disadvantage for a council using a notional budget for the council

â¢ direct assessment - based on the approach of assessing the level of disadvantage for a council in each area of expenditure and revenue.

Table C.1 shows the type of distribution model used by each grants commission.

Table C.1 Di stribution models used by grants commissions for general purpose grants for 2011-12 allocations

State Model used

NSW Direct assessment model

Vic. Balanced budget model after assistance for natural disaster relief is taken out of the pool

Qld Balanced budget model

WA Balanced budget model

SA Direct assessment model after allocations for the Outback Areas Community Development Trust and five Indigenous local governing bodies are determined separately and taken out of the pool

Tas. Balanced budget model

NT Balanced budget model

Source: Information provided by local government grants commissions in each state and territory.

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Appendix C

Balanced budget model

Victoria, Queensland, Western Australia, Tasmania and the Northern Territory use the balanced budget approach. Their models are based on making an assessment of each council’s costs of providing services and its capacity to raise revenue, including its capacity to obtain other grant assistance. The balanced budget model can be summarised as:

general purpose grant equals assessed costs of providing services

plus assessed average operating surplus / deficit

less assessed revenue

less actual receipt of other grant assistance

Direct assessment model

New South Wales and South Australia use the direct assessment approach. Their models are based on making an assessment of the level of advantage or disadvantage in each area of expenditure and revenue and summing these assessments over all areas of expenditure and revenue for all councils.

In each area of expenditure or revenue, an individual council’s assessment is compared to the average council. The direct assessment model calculates an individual council’s level of disadvantage or advantage for each area of expenditure and revenue, including for other grant assistance. It can be summarised as:

general purpose grant equals an equal per capita share of general purpose grants

plus expenditure needs

less revenue needs

less other grant assistance needs

The balanced budget and direct assessment models will produce identical assessments of financial capacity for each council if the assessed average operating surplus or deficit is included in the balanced budget model.

Scope of equalisation

The scope of equalisation is about the sources of revenue raised and the types of expenditure activities that a commission includes when determining an allocation of the general purpose grant on a horizontal equalisation basis. Table C.2 shows the differences in the scope of equalisation of the commissions.

Note: F unctions for which a ‘Yes’ is provided above are not necessarily separately assessed by the relevant commission but may be included as part of another assessed function. For example, depreciation might be included as a cost under the category for which the relevant asset is provided. Similarly, revenue functions might be included as reductions in the associated expenditure function. In addition, Queensland uses two expenditure categories that are not included in the above table. These are Environment and Business and Industry Development. Potentially, Business and Industry Development could fall under Entrepreneurial Activity.

Source: Inf ormation provided by local government grants commissions in each state and territory.

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Appendix C

Revenue assessments

Sources of revenue for local government are rates, user charges and government grants. The treatment of government grants is discussed in the section below.

New South Wales distinguishes between urban and non-urban properties. Non-rateable properties are excluded from the calculations.

Land values per property for the council are compared to a state standard value and the result is multiplied by a state standard rate-in-the-dollar. To reduce seasonal and market fluctuations in the property market, the valuations are averaged over three years. In the revenue allowance calculation, councils with low values per property are assessed as being disadvantaged and are brought up to the average. Councils with high values per property are assessed as being advantaged and are brought down to the average. Under this approach, the revenue raising capacity of each council is equalised against the state standard.

Victoria applies an average state-wide rate in the dollar to capital improved values, averaged every three years. Each council’s relative revenue raising capacity is determined by multiplying this average rate by each council’s valuation base on a capital improved value basis.

The rate revenue raising capacity is calculated separately for each of the three major property classes - that is, residential, commercial / industrial / other, and farm. For each of the nine areas of expenditure assessed, a separate assessment is made of each council’s relative capacity to generate revenue from government recurrent grants. This is incorporated on the expenditure side of the method and treated as negative expenditure.

On the revenue side of the method, an assessment is made of each council’s capacity to generate own-source revenue from user fees and charges for each of the nine functional areas. For some functions, this is then modified by a series of ‘revenue adjustors’ to take account of differences between municipalities in their capacity to generate fees and charges due to their characteristics.

Queensland changed their rating assessment, following a methodology review, from the pre- existing differential formula to a more uniform formula by adopting a 10-year averaging of property valuations to minimise the effects of large fluctuations and to better accommodate the government’s valuation cycle. The total state rate revenue is divided by the total state land valuation to derive a cent in the dollar average, which is then multiplied by each council’s total land valuation. This is then adjusted to allow for a council’s capacity to raise rates using the Socio-Economic Indexes for Areas produced by the Australian Bureau of Statistics. User fees and charges and garbage revenue are also assessed using state averages. The state average (using population and bins serviced as the unit of measure) is multiplied by each council’s population and number of bins serviced respectively.

Other grants relevant to the expenditure categories are included as revenue according to the actual amounts received by each council rather than a state average.

Western Australia distinguishes urban properties, agricultural properties, pastoral properties and mining property, and assesses the rate revenue capacity by different methods for each.

The rate revenue capacity of urban properties is estimated as the sum of two components:

â¢ the product of gross rental values, averaged over three years, and a constant more or less like an average rate in the dollar

â¢ the number of rateable assessments and a corresponding constant value per assessment.

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The agricultural rate capacity for each council is based on its improved capital value of agricultural land averaged over three years, the number of agricultural properties and area of agricultural land. Pastoral rate capacity is based on unimproved capital values averaged over three years. Mining rate capacity is estimated with reference to mining unimproved capital value and a per assessment component.

Western Australia also makes an assessment of revenue capacity for recreation and culture; building control fees and charges; and transport.

South Australia estimates each council’s revenue raising capacity for each of five land use categories: residential, commercial, industrial, rural, and other. To make these estimates, the state average rate in the dollar is used - that is, the ratio of total rate revenue to total improved capital values of rateable properties. This result shows how much rate revenue a council is able to raise relative to the average.

To overcome fluctuations in the base data, valuations, rate revenue and population are averaged over three years.

Tasmania applies a state-wide average rate in the dollar to each council’s total assessed annual value (AAV) of rateable properties, averaged over three years. Individual council shares of the state total AAV are used to distribute the total assessed revenue between councils.

Northern Territory standards are calculated by applying costs adjustors and average weightings to assess each local government’s revenue raising capacity and expenditure need. The assessment is the measure of each local government’s ability to function at the average standard.

As the ownership of the land on which many communities are located is vested in Land Trusts established pursuant to the Commonwealth Aboriginal Lands Rights (Northern Territory) Act 1976, it is not feasible to use a land valuation system solely as the means for assessing revenue raising capacity.

The collection of actual accurate financial data through annual returns has enabled a number of revenue categories to be introduced, including rates where applicable, domestic waste, poll tax and interest.

Other grants support National Principle

The fourth National Principle for the general purpose grant involves the revenue assessment and states:

Other relevant grant support provided to local governing bodies to meet any of the expenditure needs assessed should be taken into account using an inclusion approach. (National Principle A4)

This National Principle requires commissions, when determining the allocation of grants on a horizontal equalisation basis, to include all grants that are provided to councils from governments as part of the revenue that is available to councils to finance their expenditure needs. Only those grants that are available to councils to finance the expenditure of a function that is assessed by commissions should be included. Both the grants received and the expenditure it funds should be included in the allocation process.

Table C.3 provides details on the grants included by commissions in allocating the general purpose grants in 2010-11.

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Appendix C

Table C.3 Grants treat ed by inclusion in general purpose grant allocations for 2011-12, by jurisdiction

State Grants treated by inclusion

NSW Local road grant, Roads to Recovery grant and library grant.

For other recurrent grant support the grant is deducted from the council’s expenditure before standard costs are calculated.

Vic. All Australian and state government recurrent grants. This includes each council’s local road grant and 77 per cent of Roads to Recovery funding.

Qld Allocation of previous year’s general purpose grant, 50 per cent of previous years local road grant, 20 per cent of the state Aboriginal and Torres Strait Islander councils State Government Financial Aid grant.

WA 93 per cent of the local road grant, 63 per cent of the Roads to Recovery grant, as well as other relevant operating grants provided by the Australian and State Governments for community amenities, recreation and culture, and education health and welfare.

SA 85 per cent of the local road grants, library grants, and the Roxby Downs unique extraordinary grant.

Tas. Local road grant, Roads to Recovery grant and state motor taxes collected on the registration of heavy vehicles.

NT Local road grant, library grant, and 50 per cent of the Roads to Recovery grant.

Source: Based on information provided by local government grants commissions in each statte and territory.

Expenditure assessments

In addition to expenditure on local roads, local governments’ main expenditures are on general public services, including the organisation and financial administration of councils; recreation facilities; and sanitation and protection of the environment, including disposal of sewerage, stormwater drainage and garbage. Assessing local road expenditure needs for the general purpose grant is discussed in the section below.

New South Wales assesses 21 expenditure categories, including three classes of road maintenance.

Disability factors are also considered among the expenditure categories. A disability factor is the estimate of the additional cost of providing a standard service due to inherent characteristics beyond a council’s control.

A standard expenditure is calculated based on average expenditures, excluding extreme values. Differential expenditure needs are equal to the standard per service unit, most commonly population, multiplied by the average number of service units and the disability factors for the category. In most cases, if the differential expenditure needs per unit is assessed to be negative, zero is substituted, so generally no reductions are made to the standard assessments.

Victoria assesses nine expenditure categories, including: Governance; Family and Community Services; Aged and Disabled Services; Recreation and Culture; Waste Management; Local Roads and Bridges; Traffic and Street Management; Environmental Protection Services; and Business and Economic Services.

With the exception of local roads and bridges, standardised expenditure in each category is calculated by multiplying the relevant unit of need, such as population, by the average council expenditure on that category. A composite cost adjuster is also applied, which takes into account factors that make service provision cost more or less for individual councils.

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Queensland assesses nine categories of expenditure, which include: Administration; Public Order and Safety; Education, Health, Welfare and Housing; Garbage and Recycling; Community Amenities, Recreation, Culture and Libraries; Building Control and Town Planning; Business and Industry Development; Roads; and Environment. A combination of up to five cost adjustors are applied to expenditure amounts, including two for Indigenous descent.

Western Australia uses the balanced budget method for allocating the general purpose grant and assesses seven expenditure categories. These categories include Governance; Law, Order and Public Safety; Education, Health and Welfare; Community Amenities; Recreation and Culture; Building Control; and Transport.

South Australia assesses 12 expenditure categories in addition to the local road categories. The 12 categories include Waste Management; Aged Care Services; Services to Families and Children; Health Inspection; Sport and Recreation; Stormwater Drainage Maintenance; Community Support; Jetties and Wharves; Public Order and Safety; Planning and Building Control; Bridges; and Other Needs Assessment. South Australia excluded the libraries expenditure category from the methodology in 2011-12 due to inconsistencies in data returns for visitor numbers.

Under the direct assessment method the available grant is initially allocated to councils in proportion to their population and positive or negative adjustments are calculated for each category. These adjustments are for factors outside the control of the council.

Tasmania assesses seven expenditure categories as well as assessing local road needs. These categories include General Administration; Health, Housing and Welfare; Waste Management and the Environment; Planning and Community Amenities; Recreation and Culture; Law, Order and Public Safety; and Other.

A range of cost adjustors are applied that take into account factors that influence the cost of service provision for individual councils.

The Northern Territory uses the balanced budget approach and assesses nine expenditure categories, including one for local roads. Three cost adjustors are used and include location, dispersion and Aboriginality.

Assessing local road expenditure needs under the general purpose grants

As part of the expenditure needs assessment for determining the general purpose grant, commissions also assess each council’s local road needs. Some commissions use the same methodology as for the local road grants (discussed below), while others use a different methodology.

The main features of the models commissions use for assessing local road needs when allocating general purpose grants in 2011-12 are as follows.

New South Wales uses a different model for assessing local road needs in the general purpose grant from the model used for the local road grant.

Expenditure allowances are allocated for urban local roads, sealed rural local roads, and unsealed rural local roads. Calculating these expenditure allowances involves the application of disability factors for topography, climate, soils, materials, drainage, heavy traffic, travel, and development. It also assesses needs with reference to the length of each type of road per urban or rural property, as applicable, and with provision for bridge and culvert needs per kilometre of local roads.

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Appendix C

Victoria uses the same model for assessing local road needs in the general purpose grant as for the local road grant.

The net standardised expenditure for local roads is calculated by subtracting other grant support from gross standardised expenditure.

Queensland uses a different model for assessing local road needs in the general purpose grant from the model used for the local road grant.

The asset preservation model uses costs to maintain a council’s road network, including bridges and hydraulics, in average condition. It takes into account traffic volume, including heavy vehicles; type of construction; and cost adjusters such as climate, soil, terrain and location. As part of the methodology review, changes to the road expenditure category have resulted in the removal of capping for annual variations.

Western Australia uses the same model for assessing local road needs in the general purpose grant as for the local road grant.

The asset preservation model assesses the average annual costs of maintaining each local government’s road network and aims to equalise road standards. These standards help local governments develop their road systems to the same standard as more affluent local governments.

South Australia uses a different model for assessing local road needs in the general purpose grant from that used for the local road grant.

Roads are divided into six categories, with road length used as the unit of measure and cost relativity indices developed for each road category. These indices are used to determine why it costs one council more than another to reconstruct or maintain a kilometre of road. These indices involve factors such as soil, terrain and drainage.

Tasmania uses the same model for assessing local road needs in the general purpose grant as for the local road grant.

The road preservation model uses dimensions of the average Tasmanian road, as well as average costs and maintenance schedules to calculate the state average cost/km/per annum for councils to maintain their road networks. Three road types are included within the assessment. These are urban sealed, rural sealed and unsealed. In addition, cost adjustors and an allowance are applied to account for relative cost advantages or disadvantages faced by councils in maintaining roads.

The Northern Territory uses the same model for assessing local road needs in the general purpose grant as for the allocation of local road grants.

Local road needs are assessed by calculating weighted road lengths. This is done by applying different weights to different road types where the road types are Kerbed and Sealed; Sealed; Gravel; Cycle Paths; Formed; or Unformed. Weighted road lengths are calculated by applying these weightings to the road length of each road type.

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Needs of Indigenous communities

The fifth National Principle for distribution of the general purpose grant states:

Financial assistance shall be allocated to councils in a way which recognises the needs of Aboriginal peoples and Torres Strait Islanders within their boundaries. (National Principle A5)

New South Wales councils with an above-state-average proportion of Indigenous Australians receive recognition for the additional costs of providing services. This cost adjustor is applied to its Administration and General Community Services expenditure assessments.

Victoria applies a cost adjustor reflecting the proportion of each council’s population that is Indigenous. This cost adjuster is applied to its Governance and Family and Community Services expenditure assessments.

Queensland applies a cost adjustor to both Indigenous and non-Indigenous councils for Indigenous descent whereby the assessed expenditure per capita is increased in accordance with the proportion of Indigenous population and, additionally, for Indigenous people aged over 50.

An Indigenous-related cost adjustor is applied to the Public order and safety; Education, Health, Welfare and Housing; and Community Amenities, Recreation, Culture and Libraries expenditure assessments.

Western Australia applies three cost adjustors: Indigenous; socio-economic disadvantage; and population dispersion to their expenditure assessments. In addition, 22 councils received an allowance in remote and regional areas to recognise the additional costs of providing municipal services in Aboriginal communities.

In South Australia, the needs of Indigenous communities within mainstream councils are addressed through allocating additional funding per capita. Additionally, special consideration is given to councils that have a high non-resident use of their facilities, such as those councils that have high seasonal influxes of Indigenous Australians.

The five Indigenous local governing bodies also receive financial assistance grants. Due to a lack of comparable data, general purpose grants for these communities cannot be calculated in the same way as grants to other councils.

Tasmania makes no special allowance for Indigenous people, as there are very few separately identifiable Indigenous communities in the state and no targeted services provided by councils for these communities that are not also provided to other residents.

The Northern Territory applies a cost adjustor based on the proportion of the population that is Indigenous Australian to its expenditure assessments for General Public Services; Public Order and Safety; Housing and Community Amenities; Health; Education; and Social Protection. The majority of shire service delivery in the Northern Territory is to remote communities whose population is almost entirely Indigenous Australian.

While the special needs of Indigenous Australians are recognised when assessing the expenditure of councils on services in all jurisdictions, it remains the decision of each council as to how the grant will be spent and what services will be provided for its Indigenous residents.

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Council amalgamation National Principle

A sixth National Principle for the general purpose grant applies to councils that amalgamate. The amalgamation principle took effect on 1 July 2006 and states:

Where two or more local governing bodies are amalgamated into a single body, the general purpose grant provided to the new body for each of the four years following amalgamation should be the total of the amounts that would have been provided to the former bodies in each of those years if they had remained separate entities. (National Principle A6)

In addition to complying with the other National Principles for the general purpose grant, grants commissions are required to treat the general purpose grant allocated to councils formed as the result of amalgamation in a way that is consistent with this National Principle.

Factoring back and satisfying the minimum grant principle

Once the revenue capacity and expenditure needs have been determined for each council, the raw grant can be calculated by subtracting its revenue capacity from expenditure needs.

There are two situations that require commissions to apply a ‘factoring back’ process. The first situation is when the total raw grant does not equal the available grant for the jurisdiction. This can occur when the commission:

â¢ has not assessed all revenue and expenditure categories for councils in the jurisdiction

â¢ has not ensured that the total assessed revenue and expenditure across all councils in the jurisdiction equals the total actual revenue and expenditure for all councils in the jurisdiction

â¢ has not used a budget result term for each council when applying the balanced budget approach.

The use of a consistent approach for allocating grants would address this issue.

The second situation occurs when the raw grant allocation for a council does not comply with the minimum grant National Principle. This principle requires:

The minimum general purpose grant allocation for a local governing body in a year will be not less than the amount to which the local governing body would be entitled if 30 per cent of the total amount of general purpose grants to which the state or territory is entitled under section 9 of the Act in respect of the year were allocated among local governing bodies in the state or territory on a per capita basis. (National Principle A3)

Grants to councils with raw grant allocations below the minimum grant (including negative grants) are increased to comply with the minimum grant National Principle. This requires grants to other councils in the jurisdiction to be reduced through a factoring back process.

Should the grant to one or more councils following the initial factoring back process reduce their grant below the minimum grant, the factoring back process would be repeated. This process would have to be repeated until both the minimum grant and available grant constraints are simultaneously met.

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Two approaches are used by commissions for factoring back the raw grant:

â¢ The proportional method - each council’s raw grant is reduced by the same proportion so that the total of the grants equals the available grant.

â¢ The equalisation ratio method - each council’s grant is reduced such that all councils can afford to fund the same proportion of their expenditure needs with their total income (assessed revenue capacity plus other grant support and general purpose grant).

Local road grants

The National Principles require the local road grant to be allocated so that, as far as practicable, the grant is allocated to councils:

… on the basis of the relative needs of each council for roads expenditure and to preserve its road assets. In assessing road needs, relevant considerations include length, type and usage of roads in each council area. (National Principle B1)

For the local road needs assessment, the models are either relatively simple constructs or more complex asset preservation models.

New South Wales, Queensland, South Australia and the Northern Territory use relatively simple models to allocate the local road grant. New South Wales and South Australia firstly classify local roads as either metropolitan or non-metropolitan and then allocate funding based mainly on the factors of population and road length. Queensland allocates funding directly based on the factors of population and road length. The Northern Territory allocates funding based on road length and road surface type. These approaches appear to have been based on arrangements that were in place before 1991-92, when these grants were paid to councils as tied grants.

Victoria, Western Australia, and Tasmania use asset preservation models to allocate the local road grant. The asset preservation model attempts to measure the annual cost of maintaining a council’s road network. It takes into account recurrent maintenance costs and the cost of reconstruction at the end of the road’s useful life. It can also take other factors into account such as:

â¢ the costs associated with different types of roads (sealed, gravel and formed roads)

â¢ the impact of weather, soil types and materials availability on costs

â¢ the impact of traffic volume on the cost of maintaining these roads.

Prior to applying their grant allocation methodologies, Western Australia and South Australia quarantine seven and 15 per cent respectively for funding priority local road projects. Expert committees advise on the projects to be funded.

Table C.4 summarises the main features of the models used by the commissions for allocating local road grants in 2010-11.

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Table C.4 F eatures of local government grants commission models for allocating local road grants, 2011-12

State Features of the distribution model

NSW Based on a model developed by the NSW Roads and Traffic Authority, councils in the Sydney, Newcastle and Wollongong metropolitan areas receive 27.54 per cent of the grant pool, with 38 per cent of this portion allocated on the basis of population, 57 per cent on the basis of road length and 5 per cent on the basis of bridge length.

The remaining 72.46 per cent is allocated to councils outside the above metropolitan areas, with 19 per cent of the remaining portion allocated on the basis of population, 74 per cent on the basis of road length and 7 per cent on the basis of bridge length.

Vic. Allocation is based on an asset preservation model.

Qld Allocation for 62.85 per cent of the pool is based on road length and 37.15 per cent on population.

WA Allocation of 93 per cent of the road grant pool is based on an asset preservation model.

The remaining 7 per cent is set aside for special projects - with two-thirds of this portion for bridges and one-third for access roads serving remote Indigenous communities.

SA Allocation of 85 per cent of the road grant pool is split between metropolitan and non-metropolitan councils based on population and road length. Allocations for metropolitan councils are based on an equal weighting of population and road length, while allocations for non-metropolitan councils are based on an equal weighting of population, road length and council area.

The remaining 15 per cent of the pool is set aside for special projects.

Tas. Allocation of 95 per cent of the road grant is based on an asset preservation model.

The remaining 5 per cent of the grant allocated on the basis of bridge deck area.

NT Allocation is based on weights applied to road length and surface type.

Source: Inf ormation provided by local government grants commissions in each state and territory.

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179

D

Table D.1 shows the distribution of local government financial assistance grants and some basic information, such as population, area in square kilometres and road length in kilometres, for each local governing body in Australia.

For the financial assistance grants, the table shows the actual total grant entitlement for 2011-12 and the estimated total grant entitlement for 2012-13. For each of these years, the components of the financial assistance grants, including the general purpose grant and the local road grant, are also provided.

The councils are listed alphabetically by state and the Northern Territory. The Australian Classification of Local Governments (ACLG) category for each council is listed in the second column. An explanation of the ACLG is at Appendix F.

To facilitate comparison, the general purpose grant per capita and the local road grant per kilometre are provided for 2011-12. Additional comparative information on grants received is provided in Chapter 2 as follows:

Table 2.7 provides the average general purpose grant per capita for councils, grouped by state and by ACLG.

Table 2.8 provides the average local road grant per kilometre for councils, grouped by state and by ACLG.

Councils receiving the minimum per capita grant in 2011-12 are indicated with a hash (#) beside their entry in the ‘General purpose grant per capita’ column. The per capita grant of these councils differs slightly between jurisdictions because of different data sources for population used by the Australian Government to calculate the state share of general purpose grants and those used by the local government grants commissions for allocations to individual councils. For further information on the minimum grant entitlement, see ‘Local governing bodies on the minimum grant in Chapter 2.

Indigenous local governing bodies are identified by an asterisk (*) against the name of the council.

The source of the data is the relevant state or territory local government grants commission.

Distribution of financial assistance grants to local governing bodies in 2011-12

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Table D.1

Di

stribution of financial assistance grants to local governing bodies by classification and population 2011-12 and 2012-13 Council Name Classi-fication Population

Councils often compare the grant they receive with the grants of other councils in their state and assume that, if another council gets a similar sized grant, both councils have been assessed as having similar relative needs. Such an assumption can be incorrect.

In determining the allocation of general purpose grants and the local road grants to councils, local government grants commissions implicitly determine a ranking for each council in their state on the basis of relative needs. A comparison of councils on the basis of relative needs is preferred to a comparison on the basis of the actual grant they receive. In this appendix, the grant per capita is used as the basis for comparing relative need for the general purpose grants. For local road grants, allocation of grants for each council is divided by their length of local roads to obtain a relative expenditure needs measure. In tables E.1 to E.7, councils within a state are sorted on the value of:

â¢ the general purpose grant per capita

â¢ the local road grants per kilometre.

For each council, the table gives the ranking obtained for both grants. Each council’s Australian Classification of Local Government (ACLG) category is also provided (see Appendix F).

Councils are ranked from the council in the greatest assessed relative need to the council in the least assessed relative need. For each state and the Northern Territory, the positions of the average general purpose grant per capita and the average local road grant per kilometre are also shown within the ranking of councils. These state averages are taken from Tables 2.9 and 2.10, except in Western Australia and South Australia, where special local road grants have been excluded from the local road grant per kilometre calculation for each council and the state average.

Councils should use these rankings when comparing their financial assistance grants with those other councils in their state. For instance, Appendix D shows that in Victoria, Banyule City Council received $3 331 399 in general purpose grants in 2011-12, while Frankston City Council received $7 359 838. This translates to Banyule’s grant being $26.81 per capita, while Frankston’s grant is $56.41. This suggests that, while the two councils have similar populations and similar locations, the Victoria Grants Commission has assessed Frankston City as having the greater relative need. In Table E.2, Frankston is shown to rank 57th among Victoria’s councils for general purpose grants, while Banyule is ranked 65th.

Ranking of local governing bodies on a relative needs basis 2011-12

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Below is a key to symbols used in Tables E.1 to E.7. See Appendix F for a full explanation.

The Australian Classification of Local Governments (ACLG) was first published in September 1994 and has proved a useful way to categorise local governing bodies across Australia. The ACLG categorises councils using the population, the population density and the proportion of the population that is classified as urban for the council.

The local governing bodies included in the classification system are those that receive general purpose financial assistance grants as defined under the Local Government (Financial Assistance) Act 1995 (Cwlth). Therefore, bodies declared by the federal minister on the advice of the state minister to be local governing bodies for the purposes of the Act are included in the ACLG. These include community councils. However, county councils, voluntary regional organisations of councils and the Australian Capital Territory are excluded.

The classification system generally involves three steps. Each step allocates a prefix formed from letters of the alphabet to develop a three-letter identifier for each class of local government. There are a total of 22 categories. For example, a medium-sized council in a rural agricultural area would be classified as RAM - rural, agricultural, medium. If it were remote, however, it would be classified as RTM - rural, remote, medium. Table F.1 provides information on the structure of the classification system.

The system developers recognised that, with so many different types of local governing bodies in Australia and with changing population distribution patterns, there will be occasions where a council’s profile does not fully match the characteristics of the class into which it has been placed. When this occurs, a local governing body may be reallocated to a classification that more accurately reflects its circumstances.

Notwithstanding the capacity of the ACLG system to group like councils, it should be noted that there remains considerable scope for divergence within these categories. For this reason the figures in Appendix D should be taken as a starting point for enquiring into grant outcomes. This divergence can occur because of factors including isolation, population distribution, local economic performance, daily or seasonal population changes, the age profile of the population and geographic differences. The allocation of the general purpose grant between states on an equal per capita basis and the local road grant on a fixed shares basis can also cause divergence.

To ensure the ACLG is kept up to date, at the end of each financial year local government grants commissions advise of any changes in the classification of councils in their state.

Table F.2 provides details of the number of local governing bodies at July 2012, by ACLG category and by state. As there were changes to the ACLG reported for local governing bodies in 2011-12, Table F.3 gives changes to local governing body classifications and reasons for the change.

Australian classification of local governments

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Local government grants commissions do not take the ACLG classification of a council into account when determining the level of general purpose grant.

Further details of the classification system can be found in the original report on the ACLG, published by the Department of Housing and Regional Development in 1994.

Table F.1 S tructure of the classification system

Step 1 Step 2 Step 3 Identifiers Category

URBAN (U) Population more than 20 000 OR If population less than 20 000, EITHER Population density more than 30 persons per sq km OR 90 per cent or more of the local governing body population is urban

CAPITAL CITY (CC) Not applicable UCC

METROPOLITAN DEVELOPED (D) Part of an urban centre of more than 1 000 000 or population density more than 600/sq km

SMALL (S) MEDIUM (M) LARGE (L) VERY LARGE (V)

up to 30 000 30 001-70 000 70 001-120 000 more than 120 000

UDS UDM UDL UDV

REGIONAL TOWNS/CITY (R) Part of an urban centre with population less than 1 000 000 and predominantly urban in nature

SMALL (S) MEDIUM (M) LARGE (L) VERY LARGE (V)

up to 30 000 30 001-70 000 70 001-120 000 more than 120 000

URS URM URL URV

FRINGE (F) A developing LGA on the margin of a developed or regional urban centre

SMALL (S) MEDIUM (M) LARGE (L) VERY LARGE (V)

up to 30 000 30 001-70 000 70 001-120 000 more than 120 000

UFS UFM UFL UFV

RURAL (R) A local governing body with population less than 20 000 AND Population density less than 30 persons per sq km AND Less than 90 per cent of local governing body population is urban

SIGNIFICANT GROWTH (SG) Average annual population growth more than 3 per cent, population more than 5000 and not remote

Not applicable RSG

AGRICULTURAL (A) SMALL (S)

MEDIUM (M) LARGE (L) VERY LARGE (V)

up to 2000 2001-5000 5001-10 000 10 001-20 000

RAS RAM RAL RAV

REMOTE (T) EXTRA SMALL (X)

SMALL (S) MEDIUM (M) LARGE (L)

up to 400 401-1000 1001-3000 3001-20 000

RTX RTS RTM RTL

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Appendix F

Table F.2 A CLG category listing of local governments, by state, July 2011

State NSW VIC QLD WA SA TAS NTa Australia

Urban Capital City (UCC) 1 1 1 1 1 1 1 7

Urban Development Small (UDS) 2 0 0 10 2 0 0 14

Urban Development Medium (UDM) 12 0 0 5 7 0 0 24

Urban Development Large (UDL) 9 9 0 4 4 0 0 26

Urban Development Very Large (UDV) 8 13 6 2 1 0 0 30

Urban Regional Small (URS) 11 8 2 2 8 4 2 37

Urban Regional Medium (URM) 19 10 10 5 1 1 0 46

Urban Regional Large (URL) 5 3 4 0 0 0 0 12

Urban Regional Very Large (URV) 3 1 3 0 0 0 0 7

Urban Fringe Small (UFS) 0 2 1 1 3 1 2 10

Urban Fringe Medium (UFM) 3 2 1 4 1 3 0 14

Urban Fringe Large (UFL) 1 2 0 2 1 0 0 6

Urban Fringe Very Large (UFV) 7 5 0 1 1 0 0 14

Rural Significant Growth (RSG) 0 0 0 4 1 0 0 5

Rural Agricultural Small (RAS) 4 0 0 50 9 2 2 67

Rural Agricultural Medium (RAM) 20 1 3 13 13 3 0 53

Rural Agricultural Large (RAL) 25 7 0 6 9 8 0 55

Rural Agricultural Very Large (RAV) 20 15 7 4 7 6 1 60

Rural Remote Extra Small (RTX) 3 0 6 6 4 0 0 19

Rural Remote Small (RTS) 0 0 9 4 0 0 0 13

Rural Remote Medium (RTM) 1 0 15 5 0 0 1 22

Rural Remote Large (RTL) 1 0 5 9 1 0 7 23

Total 155 79 73 138 74 29 16 564

Note: a NT T otal excludes Roads Trust Account

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Table F.3 Changes in A CLG category for 2011-12: reasons for change, by state, July 2011

Council Name Classification Reason for change

New South Wales

Maitland URL 2

Willoughby UDL 2

Victoria

Bass Coast UMF 2

Cardinia UFL 2

Strathbogie RAV 2

Queensland

Cassowary Coast URM 4

Central Highlands URM 4

Cherbourg RTM 4

Cloncurry RAM 4

Cook RAM 4

Gold Coast UDV 4

Ipswich UDV 4

Logan UDV 4

Moreton Bay UDV 4

Napranum RTS 4

Palm Island RTM 4

Redland UDV 4

Scenic Rim UFM 4

Sunshine Coast UDV 4

Woorabinda RTM 4

Wujal Wujal RTX 4

Western Australia

Geraldton-Greenough (URM) and Mullewa (RAS) amalgamate to form Greater Geraldton 1 July 2011

URM 1

Augusta-Margaret River RAV 2

Broome RTL 4

Coolgardie RTL 4

Gingin RAL 2

Gosnells UFL 4

Kwinana UFS 4

Manjimup RAV 2

Mount Magnet RTS 4

Northam RAV 2

Plantagenet RAL 2

Port Hedland RTL 4

Roebourne RTL 4

South Australia

Mount Barker URM 2

Key: Reasons for Changes 1 Amalgamations/Splits/Boundary Changes 2 Changes due to population movements 3 Declared council 4 Revision of classification to more adequately reflect circumstances

103, 109, 143 Local Government Association of South Australia (LGASA), 48, 50, 127, 133-134 Local Government Association of Tasmania (LGAT), 140, 142 Local Government Association of the Northern Territory (LGANT),